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2007-02-06T13:10:00.000-08:00

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Buffett: "shock and awe" philanthropy

2006-07-17T14:06:00.000-07:00

I have held off commenting on Warren Buffett's $31 billion gift to the Gates Foundation to see what folks smarter than I have had to say. (And I was on vacation.) The comments of many of these people have been collected in one place: the current issue of the Chronicle of Philanthropy. If you'd rather not read the whole thing, I will selectively draw on their ideas in such a way that the piece appears to be an uncanny affirmation of my own ideas.

Approving or not, everyone initially invokes generosity. $31 billion is a lot, no matter how rich you are. (In Buffett's case, it's 70% of his net worth.)

From this starting point, Stan Katz expresses concern about what appears to be an unreflective abdication of responsibility for Buffett's philanthropic impact--hardly consistent with the shrewd acumen associated with Buffett's approach to investing:

"The essence of philanthropy (to use the intuitions of John Rockefeller and Andrew Carnegie) is the thoughtful consideration of strategies to improve the welfare of humankind. Mr. Buffett clearly has the right ends in mind. But shouldn't one of the world's richest individuals consider the strategies that constitute the means? Are we really better off taking the thought out of philanthropy?"

Rick Cohen (and others) express general concern about unprecedented concentrations of wealth in yet another part of our economy: "In no way do I question the genuine commitment of Bill and Melinda Gates to tackle the nation's and the world's toughest social, or in their case, medical challenges. But we do have to take heed, in a nation of ever-increasing concentrations of wealth, of our part in that process, and the evidence is that increasing disparities are not healthy for our society — and probably not healthy for philanthropy."

Of course there is the obvious point about efficiency and not "reinventing the wheel." But (my ideas here) we are not talking about the wheel anymore--or anything at all like it. The fact is, we have not even begun to understand the implications of the vast economies of scale that are emerging today--dwarfing the influence of democratic institutions.

I am reminded of what Fast Company Magazine editor Charles Fishman concluded in his recent "The Wal-Mart Effect:"

"Wal-Mart is just a symbol of the modern megacorporation.... We don't properly understand the impact of a whole tier of companies--ExxonMobil, GM, GE, Verizon, IBM, P&G, Southwest Airlines--whose operations are so large, and so dominant in certain industries or certain geographies, that like Wal-Mart they stand astride the market forces we rely on to harness them."

Once we have a handle on the real social impact of mega-philanthropy, we can begin to make these efficiency decisions responsibly.

Mixed messages on non-profit hospitals

2006-06-21T13:47:00.000-07:00

Hospitals are converting from non-profit to for-profit in record numbers. Senator Grassley, who has been accelerating this trend for some time by asking why hospitals deserve tax-exempt status, has now essentially compelled IRS Commissioner Mark Everson to survey 550 nonprofit hospitals' level of community benefit. One of Grassley's main concerns seems to be counting bad debt as charity care.

At the same time, the journal Health Affairs just released a set of four papers exploring differences in quality and costs of nonprofit hospitals, and the general consensus seems to be that nonprofits do it better and cheaper (though a mix of nonprofit and for-profit hospitals is ideal).

At the federal level, the expectations of nonprofits are vague. A quick look at my state, Massachusetts, reveals that the standards are vague and voluntary at the state level, too. At first, the guidelines (PDF) seem to require 3-6% percent of hospital expenditures to be allocated to community benefits. But then there is a caveat:

"...the Attorney General deferred recommendation of this approach until such time that, after consultation with hospitals and community advocates, it becomes appropriate to adopt this or another approach." (p. 10)

I will also point out that while fiscal accountability may be lacking here, substantive accountability (i.e., do these expenditures make a bit of difference?) is not even on the radar.

Regulators defending activists? [UPDATED]

2006-06-19T14:33:00.000-07:00

There must be some mistake here. Gerald Rosenberg, assistant attorney general for the NY State Charities Bureau is quoted by the NY Times (from Paris, they note) thus:

"If a public charity did adopt as a bylaw or a binding resolution that barred its directors from discussing public policy outside the boardroom, it might well be of concern to us."

The message we normally get from regulators, and from nonprofits themselves unfortunately, is that we shouldn't "discuss public policy." If staff or board members get involved in policy or politics, the fear is, they may jeopardize their tax-exempt status. Does NY have a different idea of what nonprofits can and should be doing?

Then again, this article was really about something else: the irony of a civil liberties organization trying to suppress information.

UPDATE: According to the NYT, the ACLU has decided to drop their controversial gag rule for board members.

iExploit: Apple seems to be not that different

2006-06-15T11:58:00.001-07:00

iPods were mentioned in a corporate social responsibility post back in Nov. 2005, but Wal-Mart was the culprit there. While Apple has a more enlightened and forward-thinking reputation, the iPod is the Wal-Mart of digital music players, and becoming the object of scrutiny is therefore inevitable.

So is the fact that if you are manufacturing in China, practices and conditions do not conform to international standards. (According to my colleague Dan Viederman at Verité, the only difference among Chinese factories is how much companies will disclose about them.) Eventually everyone moved their operations to China, including Apple. And now a good bit of investigative journalism by the UK-based Mail (excerpts and quotes here and photos here) depicts the grim life of an iPod factory worker.

Apple's "Supplier Code of Conduct" here (PDF).

(Caveat: While Wal-Mart surely attracts attention because it is ubiquitous, many contend that Wal-Mart does have some uniquely unsavory characteristics.)

US Out-Taxes France!

2006-06-14T13:32:00.000-07:00

Or so Sen. Judd Gregg (R-NH) claimed in order to pillory the ominously re-named "death tax." But the bill to repeal the estate tax could not quite muster enough votes.

The estate tax applies to inheritences of over $2 million. These taxes can be reduced to nothing in many cases with charitable contributions, and thus is a crucial motivation for charitable contributions. The nonprofit sector wins, the government collects almost no tax revenue in the end, and the super-rich are forced to pass along a only slightly diminished dynasty.

So while the US is not the hotbed of socialism some might have us think, the estate tax is one way to redistribute wealth from the super-rich to the entities that serve vulnerable populations: the nonprofit sector and the government. (Then again, isn't the New York Stock Exchange nonprofit?)

Social Sector Reforms Back Off the Table

2006-05-17T11:05:00.000-07:00

What the Senate didn't dump before the Easter break, the House dumped after the break. On Tuesday, the NY Times reported the reforms off the tax-cut bill and their fate "uncertain." Also reported:

"The opposition groups say the United Way and the other large associations have been co-opted by the Senate Finance Committee and its chairman, Charles E. Grassley"

"Other large associations" would mean Independent Sector. But while IS has clearly had unprecendented access to the Finance Committee through its Panel on the Nonprofit Sector, it is not clear who--if anyone--is being co-opted.

As I have said before, I am also not sure if the propsoed reforms would have made a big difference, but the evolving dynamics are worth tracking.

Another Non-Profit/For-Profit Hybrid Proposal

2006-05-09T09:24:00.000-07:00

Matthew Richter imagines a marketized non-profit model in the Seattle-based paper, The Stranger. Richter longs for the profit motive that comes with equity interest (ownership), which he believes is the key to impact among for-profits. While the evidence for his particular convergence theory is hard to ignore, I am afraid his ideas will only resonate with MBA and corporate consultant-types as long as he relies so heavily on the term "incentivize."

Modern Portfolio Theory?

2006-04-28T12:21:00.000-07:00

It turns out the the Supplemental Recommendations from the IS Panel on the Nonprofit Sector are similar to the main recommendations: probably good ideas, but not a big deal either way (even if they do make it into legislation). The recommendation called "Prudent Investor Standard," dealing with "the investment activities of charitable organizations," caught my eye(p. 16). I was hoping someone on the Panel was reading Jed Emerson's work on mission-related investing and was trying to raise the bar.

But alas, when the Panel mentions "modern portfolio theory," they simply mean that nonprofits should consider: "(1) long- and short-term needs of the organization in carrying out its charitable purposes; (2) the organization’s present and anticipated financial requirements; (3) the expected total return on its investments; (4) price level trends; and (5) general economic conditions.

Once again: sound, but hardly visionary.

Not Over Yet: US Charity Reform Back From the Brink

2006-04-26T08:05:00.000-07:00

The UK invented “Community Interest Companies” (see below), but the US may yet produce some social reform measures of their own.

There were great expectations for the high profile “Panel on the Nonprofit Sector,” assembled by Independent Sector and officially sanctioned by the Senate Finance Committee. The first disappointment was that their recommendations turned out to be very technical and incremental. None of the big questions were asked or answered about the future of sector. The second disappointment was that, while the Senate was fairly receptive to the Panel’s recommendations, the House version of the Tax Bill contained none of their recommendations. And when Congress took its Easter recess, one congressional staffer was quoted as saying "The whole package [of charity proposals] got dumped.”

But now the rumors are that the Senate’s charitable incentives and reforms are back on the table. And on Monday, the day Congress returned to work, Independent Sector released a “Supplement” of new recommendations.

Social Sector Reform: US 0, UK 1

2006-04-24T15:29:00.000-07:00

Today, fellow blogger Michael Gilbert pointed out a new and interesting, but unnoticed addition to the already complicated social sector taxonomy: The Community Interest Company.

CICs are an invention of the British Government, and have a legal status somewhere between the charitable organization and the privately held company. No tax breaks, capped dividends, and a community interest test requiring that "a reasonable person might consider that the company's activities are being (or its proposed activities will be) carried on for the benefit of the community."

These 219 CICs do seem to support the sector convergence theory put forth in Policy Development's "Social Investing State of the Industry Report." Though at this rate, sector distinctions will remain relevant for a long, long time.

While marketizing social purpose organizations is not new anymore, having the government audit social purposes (rather than financial records) is unusual. The British continue to be better than the US at holding nonprofits substantively accountable.

But not much is written about these rare birds. I wonder if some of our colleagues across the pond might give us some real world impressions of CICs?

Wal-Mart: Startling Changes or Spin?

2006-04-15T10:21:00.000-07:00

Emergency Contraception available in all stores, firearms eliminated from 1,000 stores, about face on retail banking, support for small business owners.... Is this the same Wal-Mart we used to know and fear? The official word coming out of the Wal-Mart "War Room" is that these decisions are "purely business decisions" or "simply based on the lack of customer purchase history." This explanation sounds like they are feeling the pressure from their myriad detractors, but don't want to admit it. Does it matter what the impetus is for corporate social responsibility?

Activist Shareholders Get On the Agenda For the Shell AGM in May

2006-03-27T13:38:00.000-08:00

The Ecumenical Council for Corporate Responsibility has organized a coalition of 130 Royal Dutch Shell shareholders, representing almost one million shares, in order to get a bold corporate social responsibility resolution on the agenda for the annual general shareholders meeting at the Hague (where Milosevic recently died being tried for crimes against humanity) on May 16th.

According to the press release, "The motion, whose supporters include the Joseph Rowntree Charitable Trust in the UK and major faith-based fundholders in the USA, focuses on the social and environmental impacts of Shell’s activities in County Mayo in Ireland, the Niger Delta and Sakhalin Island in Russia." The resolution "calls for 'a major improvement in Shell's performance in terms of community and stakeholder consultation, risk analysis, and social and environmental impact analysis.'"

The resolution itself is here (pdf).

NYT Lead Story: "Improprieties Within Red Cross"

2006-03-24T05:07:00.000-08:00

I'm not sure how to explain the different headlines on my edition of the paper and the NYT web site, but in either case, the NYT has decided that this is big. Grassley and the Senate Finance Committee have been concerned about what is clearly a totally mismanaged organization for some time (see March 11 post re: the March 3rd Finnance Committee Roundtable). While the NYT discusses vanishing cars, generators, and mattresses; and "virtually no cost controls, little oversight...," no other major paper is taking this as seriously. Grassley and the NYT's interest is clearly improving disaster response, but improving accountability and restoring credibility in the nonprofit sector is clearly just as big a problem.

Skoll World Forum Kicks Off Next Week

2006-03-23T09:43:00.000-08:00

The annual Skoll World Forum at Oxford University begins next Wednesday, and the program looks particularly good this year. While the common thread is clearly social entrepreneurship, the organizers deserve credit for the diversity of perspectives, sectors, and regions that will be represented.

I am particularly looking forward to hearing about the session led by Ian Goldin (VP, World Bank, and author, "Globalisation for Development"), and Noreena Hertz (author, "The Silent Takeover : Global Capitalism and the Death of Democracy, and "The Debt Threat : How Debt Is Destroying the Developing World").

The session blurb says that "Radicalism and pragmatism can co-exist," and that "ethics, policy, regulation and governance" are pre-conditions for social entrepreneurship to thrive.

Goldin and Hertz both recognize the relative ascendance of corporations (i.e., market forces) over governments (i.e., public policy) and the need to figure out how good governance can help ensure that the benefits of globalization reach the poor.

The event is sold out, but everyone is encouraged to follow the daily coverage on Social Edge.

Reigning in Nonprofit Hospitals

2006-03-19T11:38:00.000-08:00

Documented in today's NY Times, nonprofit hospitals are being accused of inflating prices for the uninsured, harassing indigent patients for payment, excessive compensation for top executives, and a general unwillingness to self-regulate.

And in a letter to the American Hospital Association dated March 8, 2006, Senator Grassley (Senate Finance Committee Chair) betrayed some frustration at the industry's lack of responsiveness to these allegations.

What distinguishes a nonprofit hospital from a for-profit one? Technically, federal tax law requires nonprofit hospitals to render "community benefits." These benefits are almost completely unspecified at the federal level, and at the state level there are a variety of more specific but still convoluted and ambiguous definitions.

Hospitals are big business, and if some want to keep their nonprofit status, there needs to be a better system for substantive accountability--whether it emanates from the feds, state attorneys general, or a trade association.

Red Cross Puts Congressionally-Chartered Orgs in the Crosshairs

2006-03-15T12:34:00.000-08:00

On March 3rd, the Congressional Finance Committee convened an invitation-only roundtable on nonprofit sector governance. About half the day-long session was dedicated to two nonprofits with serious governance problems: The American Red Cross and American University. While wayward nonprofits (or for-profits for that matter) are hardly news anymore, that fact that they are both Congressionally-chartered is noteworthy.

About ninety-one organizations seem to have been Congressionally-chartered (Title 36, Subtitle II) before a moratorium in 1989. Other chartered organizations include: The Girl Scouts, The National Ski Patrol, Sons of Union Veterans of the Civil War, The Future Farmers of America, Catholic War Veterans of the United States of America, and others.

Both the criteria for becoming chartered and the benefits of being chartered are vague, but they seem to be related to patriotism. Chartered organizations have several Congressionally-appointed board members, and changing their bylaws requires an act of Congress--so their permanence is well-assured. Chartered organizations are interesting anomalies on their own, but they should also be incorporated into the current debate about the proper relationship between elected officials and charities.

Robert Reich Breaks Free of Reform Minutia

2006-03-10T04:54:00.000-08:00

Robert Reich offers a refreshingly big picture, but very critical perspective on philanthropy with his cover story in the Winter 2005 Stanford Social Innovation Review.

For Reich, philanthropy may actually exacerbate the divide between rich and poor. You know how the American progressive tax rate serves a redistributive function? Well, when taking tax deductions for charitable contributions, the effect is reversed. Reich calls this "gap-widening," he applies it to all of philanthropy, and he's got a good point.

Reich draws on Evelyn Brody's excellent scholarship, citing that tax deductions for charitable tax deductions might cost the government about $36 billion in foregone revenue in 2005. Driving his gap-widening point home, Reich points out how this subsidy (for the well-to-do) dwarfs the $25.4 billion spent on welfare (for the poor). However you have to read a few more paragraphs to get the third, and most important, number: charitable contributions in 2004 were $249 billion.

In Favor of Substantive Accountability

2006-03-08T04:32:00.000-08:00

In the forthcoming "The Legitimacy of Philanthropic Foundations: U.S. and European Perspectives," (edited by Kenneth Prewitt, Mattei Dogan, Steven Heydemann, and Stefan Toepler; published by the Russell Sage Foundation), Kenneth Prewitt questions the American prioritization of "procedural accountability" over "substantive accountability."

"...Accountability [in the U.S.] is framed not around mission statements, grant-making portfolios or actual foundation performance but around issues of transparency, administrative efficiency, and fiscal responsibility (including officer compensation)."

Procedural accountability is no doubt crucial, but at the same time insufficient. (There is no guarantee that a fiscally sound organization is doing a bit of good.) And substantive accountability is no doubt more difficult (thus the complex and nebulous field of "social metrics"), but still worth a try. And finally, regulating mission-related results could get political and offend American libertarian values, but as Prewitt implies, other countries have figured out a way. So should we.

And according to Alan Abramson (Aspen Institute Philanthropy Newsletter), Prewitt feels that if foundations were held accountable substantively, the results would be damning.

IRS Commissioner on "Polluting the Charitable Sector"

2006-03-05T08:40:00.000-08:00

It seems the laundry list of threats to the integrity of the charitable sector just got longer by one item: campaign politics. Responding to complaints about nonprofits--generally churches--getting involved in campaign politics, IRS Commissioner Mark W. Everson commented to the New York Times: "We've seen a staggering increase in money flowing into campaigns, and the question is whether all this money is encroaching upon and polluting the charitable sector.

The IRS busted "three-quarters of the 82 organizations it examined," according to the Times. Nonprofits have never been very good at walking the line between legal and illegal political activity. But usually they are overcautious. Not understanding the rules, many nonprofits pass over many excellent opportunities for political and policy engagement for fear of losing their tax-exempt status. Being overcautious (and thus unengaged) is at least as troubling but it is caused by the same thing: ignorance of the rules. Let's get with it.

Here's the official IRS report (PDF).

Free Marketeers Suggest Ways to Regulate Corporations Who Support Repression (in China)

2006-02-23T09:38:00.000-08:00

The FT (opinion page, "Limit the freedom to do evil abroad"), Bill Gates, and Rep. Chris Smith (R-NJ) suggest a new version of the Foreign Corrupt Practices Act of 1977 to deal with Chinese internet censorship. Yahoo and Google have already been accused of capitulating to China's demands, and they can't figure out how to balance the "interests of shareholders, social responsibility, and public relations" without redress from US regulators, according to Slate Editor, Jacob Weisberg. The idea is to prevent the old globalization-borne "race to the bottom" among corporations who lower their ethical standards to cut costs and stay competitive:

"...even evil-resistant companies know that 'voluntary' restraints mean little in this kind of competitive hothouse. If Google.cn declines to filter 'freedom,' its site will be blocked and Baidu will capture the market."

Lobbying Like Any Other Special Interest Group

2006-02-16T06:39:00.000-08:00

Having successfully influenced Senate tax legislation, the national nonprofit sector trade association, Independent Sector, is trying to do something similar in the House. IS is hoping organizations will sign on to this letter. But the positions summarized in the letter are somewhat disappointing. They seem to merely ask for more money and less oversight. This is of course the rational agenda for any trade association, but I guess I hope that our sector is just a little bit different. Consistent with the nature of our work, shouldn't we be able to transcend pure self-interest--even if it threatens our bottom line from time to time? Even in practical terms, it seems like this kind of action reduces nonprofit sector credibility, convincing legislators and the public that we are a special interest group like any other.

(Full disclosure: My organization, Policy Development, is an IS member, and I have recently been invited to sit on IS's Ethics and Accountability Committee.)

Kellogg Foundation Goes Meta

2006-02-15T11:29:00.000-08:00

The Kellogg Foundation announced today it is giving $7.5 million to build the capacity of capacity-builders. Consistent with its goal of strengthening the nonprofit sector as a whole, it is creating a partnership with three university-based organizations who share this goal: The Center for Nonprofit Leadership and Management at Arizona State University, The Center on Philanthropy at Indiana University, and The Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University.

Activities are supposed to include: "knowledge sharing and strengthening communities of color; cross-delivery of flagship programs; development of standardized research protocols and joint publication and dissemination of research; and cross-participation in significant events."

Strengthening and reforming the social sector is clearly important, but giving this much money at this level of abstraction from the communities and individuals who need it really raises the stakes. I look forward to hearing more about this initiative.

WSJ Fronts 'Donor Intent'

2006-02-07T19:02:00.000-08:00

Today's Wall Street Journal fronts with an in-depth story about a very angry Princeton donor. The heirs of the original Robertsons, who established the Woodrow Wilson School's $35 million endowment in 1961, claim their money is not being spent according to the original intent: to train students for US government careers. Both parties have already spent millions on what has become one of the most important charity oversight battles.

Point 1: If I gave $10 million in 1870 for horse and buggy research, I might be dissappointed to learn that in 2006 it was still being spent on horse and buggy research. Instead I might expect the research to be focused on cars (the current equivalent). While US government employees still exist, something important happened since 1961: civil society. While NGOs and the nonprofit sector were nearly nonexistent in 1961, this sector is now an essential lever in international and public affairs. (Heck, I'm a Woodrow Wilson grad myself, and look at how influential I am!) Construed more broadly as "public service," Woodrow Wilson's curent priorities could hardly be considered inconsistent with its donor's original intent. In this sense, the regulatory issue is letter versus spirit of the law.

Point 2: Are the Robertsons really US government service fanatics, or are they trying to get their ancestors' money back so they can spend it on cooler charities?

Click here for Princeton's response to WSJ article.

Lobbying Reform: Opportunities and Risks

2006-02-03T05:16:00.000-08:00

Independent Sector sounds a cautionary note regarding post-Abramoff lobbying reform: Nonprofits need to be able to do advocacy and policy analysis. Predating Abramoff and the current debate on Charity Oversight and Reform, many feared they were jeopardizing their 501(c)3 tax status by mobilizing around policy issues. I spend a fair amount of time reassuring organizations that rallying around various important social policy issues is perfectly legal, and replacing vague impressions with the actual IRS rules. (OMB Watch has a good run down of quick facts.) For starters, "lobbying" is defined very narrowly, so unless you plan on spending lots of time walking up and down the halls of Congress and lavishing gifts on your elected reps, you're probably fine. Independent Sector's efforts are well spent if they safeguard legitimate advocacy while preventing obvious Abramoff-style abuses.

Abramoff Used Us

2006-01-31T10:55:00.000-08:00

The National Committee for Responsive Philanthropy (NCRP) points out that it was all too easy for Jack Abramoff to use tax-exempt loopholes for lobbying and illegal activities, and that the scandal "erodes the public’s trust in government as well as in the charitable sector, two entities that have been charged to be fiscally responsible and straightforward with public dollars." Many may not recall that "helping people in need" is another thing people used to expect from the social sector.

NCRP also notes that these loopholes will not be closed by the current set of reforms being considered in the context of the Congressional Charity Oversight and Reform debate.

But Jon Stewart wins the award for best Abramaoff commentary.

Attempts to Green Auto Industry Backfires

2006-01-09T10:07:00.000-08:00

In 2005, DaimlerChrysler (Mercedes, Chrysler, Dodge, Jeep) and BMW paid over $20 million (combined) for violations of the Corporate Average Fuel Economy regulations (aka CAFE). Throughout a company's lineup, cars must average 27.5 miles per gallon and light trucks (SUVs) 21.6 mpg. One nuance is that car companies can call their soccer mom SUVs "light trucks" and escape the higher mpg (and safety) requirements. The second nuance is that companies can offset their gas guzzlers with fuel-sippers (e.g., Toyota's impressive Prius in effect permits the company to sell its super-sized SUVs without reproach). Still, car companies seem to prefer fines to corporate environmental responsibility--and that's a great example of regulatory failure.

In related news, somehow the hybrid Mercury Mariner won "Green Car of the Year." First, who ever heard of the Mercury Mariner? Second, it gets 29 miles per gallon on the highway. There are plenty of regular (non-hybrid) cars that get better mileage than that! And Toyota and Honda hybrids get 60 and 51 miles per gallon, respectively. One possible explanation is that hybrid technology began as a way to improve mileage, but is now being used to improve performance ("Should hybrids be green, mean, or both?").

Social Sector "No Confidence" Vote

2006-01-02T17:28:00.000-08:00

An NYU study released recently reports survey results since 9/11. Apparently confidence in charitable organizations "bottomed out" on 9/11 and has remained thus. While perhaps deserved, one wonders what the results of a question about confidence in the corporate sector would be in the post-Tyco/Enron/Worldcom world we live in.

Putin edges past Bush with a last minute bid for "Autocrat of the Year" Award

2005-12-30T07:07:00.000-08:00

While even America's most prominent captains of industry at one point (pre-Khodorkovsky arrest) supported the re-nationalization of Russia's oil industry, nobody is cheering about Putin's latest conquest: the NGO sector. A former KGB officer, Putin appears to be succeeding in his attempt to pass legislation to clamp down on Russian charities and international charities with a presence in Russia. As in the US, better oversight is not a bad idea per se, but using oversight to curtail civil society and "western influence" is not the way. Since the Bush Administration has also been recklessly consolidating executive power, its condemnation of Putin is confusing. But for Bush, this is not a fight for political freedom. Rather, it is another nostalgic throwback to the simplistic East-West power struggle of the Cold War. While less than 48 hours remain in the race for "Autocrat of the Year" award, that leaves plenty of time for a counter strike from Washington.

Wal-Mart overlooks censorship policy in order to sell iPods

2005-11-30T08:41:00.000-08:00

Referring to a "philosophical" argument with Apple's Steve Jobs (Apple lets people listen to music Wal-Mart won't), Wal-Mart says "He won, we lost." Wal-Mart's exceptional after-Thanksgiving sales are attributed to better product offerings including the iPod line. The mega-store was willing to set aside its conservative social policy agenda for sales (this one time). I guess "selling out" can be a good thing sometimes.... Read more here.

Anonymous Social Sector Blogger Helps Keep Alternative Views Alive

2005-10-15T06:58:00.000-07:00

Divulging only that he works at a medium-sized East Coast foundation, this blogger says many of the things you may wish you could. Beyond the frustrations of professional life in the philanthropic sector, he also has some fresh perspectives.

Urgent: We can't do it alone

2005-10-13T02:48:00.000-07:00

While it is widely accepted that the private social sector cannot possibly fill the void that dismantling the modern welfare state would leave, the situation may be more urgent than previously understood. A new Aspen Institute study written by Alan Abramson and Lester Salamon warns that President Bush's new budget plans could reduce "federal spending in program areas of concern to nonprofits...by up to $71.5 billion in inflation-adjusted dollars over the next five years."

NCRP Brings Mission-Related Investing to New Audiences

2005-09-02T07:32:00.000-07:00

In this just-released paper ("A Call for Mission-Based Investing By America's Private Foundations" - PDF), National Committee for Responsive Philanthropy Executive Director, Rick Cohen, urges foundations to do more good (or less harm) with their endowments. This is a reiteration of Jed Emerson's Blended Value proposition, but for a more general audience.

And in addition to urging, this paper is as systematic and thorough a survey of investment tools as I have seen. Rick considers the opportinities and risks that sophisticated investment intermediaries represent, and summarizes some of the most interesting kinds of investments that are just getting under way (i.e., it's not just about financing large scale affordable housing projects any more). This is a very useful paper, and I hope it gets circulated widely.

Nonprofit Rating Systems "fall well short of providing meaningful guidance..."

2005-09-01T12:13:00.000-07:00

This morning my wife suggested we make a donation to help Hurricane Katrina victims. She proposed America's Second Harvest, reassuring me that "they're on FEMA's website of trusted charities, and that "Forbes rated them as '98% charity.'"

For people like my wife (i.e., people who want to do something right away but aren't nonprofit geeks), these kinds of screens are what decisions are based on. (Honestly, sometimes even nonprofit geeks have trouble with practical decisions like these, preferring to pontificate about the "market versus mission" debate instead.)

But an article in the Summer issue of the Stanford Social Innovation Review, "The Ratings Game (PDF)," cautions donors that the popular ratings systems "...rely too heavily on simple analysis, and ratios derived from poor-quality financial data; they overemphasize financial efficiency while ignoring the question of program effectiveness; and they generally do a poor job conducting analysis in important qualitative management strength, governance quality, or organizational transparency." In short, the ratings systems "fall well short of providing meaningful guidance...."

Do these concerns sound familiar? It looks like many of the challenges of charity oversight in the public sector are being replicated in the private sector.

Regarding the immediate donation predicament, I was left with more questions than answers. So I decided to trust my wife's instincts, and we made our donation just as she originally proposed.

Odd Shoes Indeed

2005-08-22T04:44:00.000-07:00

Nike, who generally derserves high marks for its affirmative corporate responsibility, boasts a curious number on its "product philanthropy" web page. According to the site, "Nike donated $47,000 of single shoes" to the National Odd Shoe Exchange ("a source of footwear for those requiring single shoes or pairs of differing sizes"). Is that auditable? How much is a single shoe worth? Half the value of a pair? Not in my closet, I assure you. A kooky little example of the challenges of quantifying social impact.

Secret and Enormous Costs of Fundraising

2005-08-21T21:36:00.000-07:00

Living up to its name, Sprawl has been taking over The Policy Portal. It's time to get back to some other social sector policy topics.

The word in Washington these days is that, regardless of how you feel about Independent Sector's big block recommendations to the Finance Committee, nothing is going to happen anytime soon. But given that nothing very profound was being proposed (see the The National Committee For Responsive Philanthropy's "Nonprofit self-regulation, reworded, won't lead to stronger nonprofit sector"), maybe it's for the best. I'd like to point out one more giant source of social sector abuse that no one has dared to point out: The massive amount of program dollars that is diverted to the pursuit of foundation grants.

What makes this activity so expensive? For starters, typically the most highly paid people in the organization pursue foundation grants (Executive Director, Development Director, etc.). But the bulk of the explanation has to do with the elaborate hurdles that foundations have constructed for grantseekers, and which have nothing to do with ferreting out the best proposals. Consider this recent example.

A program officer at a large national foundation had very reluctantly agreed to review two pages of material and talk it over on the phone with a small community-based organization's Director, Board Chair, and a consultant (me). After the program officer rescheduled the conference call for the third time (just as the call was about to begin), he passed us off to another program officer who then started in with the same behavior. In defense of the second program officer, I assume she didn't know the call had already been rescheduled several times. Yet an institutional ethos did begin to reveal itself. And in defense of this particular foundation, this experience was familiar.

The conference call may yet happen, and the organization may experience a short-lived feeling of elation as it is granted permission to submit a "pre-proposal." The program officer will suggest the online pre-proposal system, which will be elaborate, cumbersome, and confusing. The web forms will ask questions that are similar, but different enough to prevent the applicant from simply copying and pasting from another proposal. When a question does appear that is identical to one that was answered in another proposal, the page, word, or character requirements will again prevent the simple and elegant copy-and-paste maneuver.

Months later, if the organization has managed to keep the lights on, it may be asked to submit a full proposal. A less experienced staff person may declare: "Full proposal?! What was that elaborate process we went through three months ago?" Program and administrative staff may be once again mobilized to gather all of the elements of a proposal that couldn't possibly be rejected. The last support letters emerge from the fax machine, the package is assembled and copied nine times, and the organization's most fleet-footed young staff person rushes the package to the Fedex office, or speeds uptown in a taxi to hand deliver it. After dropping off the package, the staffer thinks hard about where to keep the tiny little taxi receipt all weekend so he doesn't lose it and remembers to submit it on Monday, stapled to a properly coded check requisition form.

If the proposal is not rejected, or lost by the foundation or the shipper (both of which has happened to my clients in just the past few months), a letter may arrive, sometimes nearly a year after the decision was made to pursue this grant, which reads "Unfortunately we have many more deserving proposals than we are able to fund. While we are not able to support your project, we encourage you to keep up the good work and consider re-applying during the next grant cycle."

If this level of detail is excruciating, it will be even more so for those who have been through this ritual. And chances are that if you are a grantseeker, you perform this ritual perpetually--and typically with many foundations at once.

Complaining to foundation staff when ill-treated is a bad idea, and writing about it for a web site visited by the entire donor community is an even worse idea. But as we continue to try and figure out how to deliver more value to vulnerable populations, we must eventually acknowledge this vast, but thus far unaccounted for, diversion of resources from program activities to foundation interaction.

Most funders don't like to see fundraising mentioned anywhere in a proposal--especially not in the budget. But to finance this burdensome ritual, nonprofits must find ways to divert massive amounts of funds intended for program purposes to the development department and the executive office. This burden is imposed on grantseekers and the communities they serve by foundations. In spite of program descriptions that are earnest and thoughtful, large foundations in particular can also be bureaucratic, disorganized, and on the privileged side of an enormous power imbalance. The result is capricious behavior among some foundation staff, a very expensive process for grantseekers, and a disincentive to speak up about it.

This power dynamic between grantseekers and funders is no secret. Vince Stehle of the Surdna Foundation refers specifically to arrogance among funders as a great reason for grantseekers to instead develop revenue-generating activities to sustain themselves (e.g., "social enterprises"). But what is not being discussed is the amount of waste that is generated by this dynamic. While social enterprise has enormous potential, would rationalizing and regulating funders more help correct this power imbalance and reduce the secret and enormous costs of fundraising?

Will NPR Bite the Hand That Feeds It?

2005-08-19T18:15:00.000-07:00

On 3/28/05, I wrote about the Catch 22 situation that public TV and radio is in right now: trying to commercialize in order to offset public funding cutbacks while being accused by Congress of not deserving public support because of these commercial elements and the alleged decline in quality and integrity this causes. (Congress and public TV supporters are also exchanging accusations of being conservative and liberal ideologues, respectively, but that aspect doesn't fit into my neat little analysis.)

Continuing the commercialization trend, NPR recently picked up Wal-Mart as a sponsor. And it turns out that I was not the only one wondering about this. Many listeners complained to NPR Ombudsman, Jeffrey Dvorkin. According to Dvorkin, "Wal-Mart symbolizes values that some listeners believe to be antithetical to the values of public radio." It would be easy enough to, in turn, write off this Dvorkin fellow as just another liberal elitist, but he points out that Wal-Mart is getting a lot of bad press these days, and that it is probably no coincidence that Wal-Mart is targeting NPR listeners with its damage control PR.

But to NPR's credit, they have been doing a good job covering Wal-Mart controversies around the country. And when the local NPR affiliate, WFCR, produced a story on sprawl in Hadley, Massachusetts (spear-headed by a planned "Wal-Mart Supercenter"), and then delayed it, I couldn't help but wonder. But I was reassured by a brief conversation with WFCR's news director, and by reading the treatment of this issue by the NPR Ombudsman.

Dvorkin's recommendation: "One way that NPR could prove that underwriting has no effect on its integrity is for NPR to produce more hard-hitting interviews, more investigative reporting and yes, even more scandalizing satires."

Wal-Mart's out, Target & Costco Are In: Seventh Generation's Illuminating Policy Decision

2005-07-29T11:56:00.000-07:00

Not all big-boxes are created equal it seems. In the recent newsletter of enviro-paper goods company Seventh Generation (who reads a paper towel company's newsletter, anyway?), President Jeffrey Hollender explains how they chose Target over Wal-Mart for its products. They may all look the same and smell weird (my insight here), but in terms of domestic and foreign labor practices, environmental impact, and general transparency, it turns out that Wal-Mart IS worse. And Target and Costco may be just a smidge more enlightened.

I am not the only one who tends to lump them all together. Baer Terckel, one of the founders of PeopleSoft, explained at a recent event on the rising tide sprawl in the Pioneer Valley (Western Mass) that "We all shop at the stores along Route 9--if not Wal-Mart and Stop & Shop, then Target and Whole Foods."

But Janet Shank at Wal-Mart Watch recently explained to me how Wal-Mart really does make the others look quaint and harmless. And a recent NY Times piece calls one of the original icons of the big-box revolution, Costco, "The Anti-Wal-Mart." Costco, for example, pays its employees on average 42% more than than its closest competitor, Sam's Club (owned by Wal-Mart). In a marketplace with razor-thin margins, that's not subtle.

"Safeguarding Charity in the War on Terror" Transcript Now Available

2005-07-15T11:08:00.000-07:00

As of today, the transcript for the Georgetown Public Policy Institute/Center for Public & Nonprofit Leadership (CPNL) June 14th panel discussion "Safeguarding Charity in the War on Terror" is now available on the CPNL website (under "OTHER SPEECHES AND EVENT TRANSCRIPTS"). To download the PDF directly, click here.

Sierra Club ED: "The other oil companies have aspirations [of corporate responsibility]"

2005-07-12T08:17:00.000-07:00

This was the wry sound bite from Sierra Club CEO Carl Pope in today's NY Times piece about a coalition of groups that have launched a new boycott campaign against ExxonMobil:

"As one of the world's most profitable companies, ExxonMobil has the power to move the world toward a more sustainable energy future. Instead, ExxonMobil has acted consistently to move our country backward on energy policy by opposing efforts to stop global warming, lobbying to drill in America's most pristine wilderness areas, and failing to promote renewable energy and fuel efficiency."

Again we see how corporate policy is becoming more significant than government policy. Is this the new frontier for democracy?

"Short-termism will stifle innovation"

2005-07-12T06:42:00.000-07:00

This was the thrust of Al Gore and David Blood's opinion piece in last week's FT. Their still new-ish Generation Investment Management LLP is all about long-term energy sector investing and research. This London-based firm is not quite ready to be held accountable to environmental performance criteria--they've decided to first prove they can make money, but that's the undercurrent. And with Jed Emerson on board as a "Senior Fellow," the future looks promising.

Substantively speaking, "short-termism" is a great way to describe a lot of corporate sector problems in a way that appeals to conventional investors and activists alike. To widen the lens even further, I'd say short-termism is a good way to characterize the risk of market-based approaches to social problems generally.

CBIS & Domini Social Investments Issue Big Box Guidelines

2005-07-11T08:10:00.000-07:00

Today, Christian Brothers Investment Services, Inc. (CBIS) and Domini Social Investments issued new guidelines for Big Box stores. Together, these firms represent $33 billion invested. And the guidelines have been endorsed by most of the other social investors you may have heard of, and a bunch of reputable nonprofits.

The report targets "environmental stewardship; public disclosure of siting policies; advance consultation with affected communities; respect for Indigenous cultures; protection of cultural heritage; and adherence to 'smart growth' practices." Several examples are discussed in the report, including Wal-Mart's evasion of a Maryland town's "Big Box Ordinance" (see yesterday's blog entry), eminent domain seizures (see 6/26 blog entry), and Wal-Mart paving over sacred places in Hawaii (although a similar situation in Mexico is not cited).

As corporate decision-making becomes more influential than that of the public and nonprofit sectors, let's hope that, in turn, these kinds of investor guidelines become as influential as conventional public policy once was.

The Wal-Mart Foundation Juggernaut

2005-07-10T18:08:00.000-07:00

According to a new report on Wal-Mart Philanthropy from the National Committee for Responsive Philanthropy (NCRP), "Local grantmaking buoys Wal-Mart's reputation even as its deplorable corporate practices gain wider circulation."

The institutional version of Richard Scrushy after his scandal broke (see 6/29/05 post below), Wal-Mart is in a hurry to improve its image. Communities across the country--and the labor unions that represent them--are getting fed up with Wal-Mart's near-poverty wages, anemic health coverage, alleged gender discrimination, immigrant exploitation, negative environmental impact, and devastating effects on community life and downtowns. So Wal-Mart has increased its grantmaking from $101 million in 2002, to $170 million in 2004, and it now claims to be the largest corporate foundation.

Not a bad thing necessarily, but a lack of transparency makes it is a little hard to tell what impact Wal-Mart makes with its philanthropy. While the Foundation's IRS 990 tax filing is an unbelievable 2,145 pages long (free on Guidestar), the form does not give detailed information about grantees--as it is required to by law.

The report points out the irony that the Foundation issues its grants in very small increments (average grant size: $1,000) through its stores in order to be responsive to the communities where its stores are. Meanwhile, these communities use every resource they have to keep Wal-Mart out. And they usually fail. One strategy that has worked, the report points out, is something called a "Big Box Ordinance." Such an ordinance forbids retail spaces to exceed 75,000 square feet. Try to get one passed in your town while you still can!

Nonprofit Hospitals Matter (...or so claims The Aspen Institute)

2005-07-02T07:08:00.000-07:00

Just as the issue is becoming a focus of policy discussions (see May 27 post below), a new report from the Aspen Institute (PDFs: summary, full report)uses actual data and analysis to challenge a growing consensus that there is no meaningful distinction between for-profit and nonprofit hospitals.

Mark Schlesinger from Yale, and Bradford H. Gray from the Urban Institute claim that, generally speaking, nonprofit hospitals charge less, provide higher quality care, and serve as a laboratory for innovation, motivating their for-profit counterparts to follow suit. The authors claim that nonprofit hospitals should be doing more to communicate these societal benefits. Making the easy assertion that accountability must increase, impressively, they also make clear that this is not so easily done. For example, you can't just count the dollar value of indigent care (although that's one good index). Community impact is tricky business requiring an understanding of indivudualize dapproaches and more methodological research.

Acknowledgement: I learned about this report from Alan Abramson's very good Aspen Philanthropy Letter. Their web presence is terrible, but you can sign up for the email newsletter by writing "subscribe" in the subject of an email to philanthropy@aspeninstitute.org .

Scrushy Supporters: ''Is it a crime to give to minority charities and churches?''

2005-06-29T08:47:00.000-07:00

Unbelievably, Richard Scrushy was acquitted yesterday in connection with "a fraudulent scheme to inflate HealthSouth's earnings by $2.7 billion from 1996 to 2002," as today's NYT puts it. There was an incredible amount of damning evidence, and no one seems to deny that massive fraud took place.

So how did he get aquitted? Scrushy's charitable actvities, many of which began when the scandal broke, seem to be getting a lot of the credit. It has become part of the routine to find religion at such moments, and now philanthropy is becoming a core element of crisis PR for captains of industry (who, as compared to Pres. Clinton, Gov. Rowland, can afford to make a big splash).

In the case of Scrushy, he has combined the two, joining a black church and donating $1 million dollars to it. Subsequently, the Church's pastor and congregants have attended most of the court deliberations and distributed flyers outside the courthouse which read "Is it a crime to give to minority charities and churches?" Given yesterday's verdict, the answer seems to be "Au contraire."

Even Scrushy's official bio mentions his "undeniably generous philanthropic service."

And an article in today's FT (membership required) focuses on Former AIG CEO Hank Greenberg's good works via The Starr Foundation, which he chairs. Greenberg is being pursued by Spitzer for fraud as well, but his grantees are rallying on his behalf. The FT calls his philanrtrhopy "a welcome distraction."

Panel on The Nonprofit Sector Loses Forest for Trees

2005-06-29T08:38:00.000-07:00

Independent Sector's Panel on The Nonprofit Sector is a talented, influential, and well-funded group of nonprofit leaders who have lost the forest for the trees. No one is opposed to greater accountability, and closing loopholes is important, too. But the Senate Finance Committee's Hearing on Charity Oversight and Reform is an historic opportunity to reevaluate the very nature of what a nonprofit organization is. While nonprofits experiment with market-based approaches to social problems, and many traditional corporations begin to accept responsibility for their social and environmental impact, the old for-profit/nonprofit distinction is becoming obsolete. The Panel's formidable resources would be better spent considering this fundamental nonprofit sector policy dilemma.

"Public Purpose" and Eminent Domain

2005-06-26T06:35:00.000-07:00

"The specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall or any farm with a factory...The government now has license to transfer property from those with fewer resources to those with more. The founders cannot have intended this perverse result." - Justice Sandra Day O'Connor in her dissenting opinion in the 5-4 Supreme Court ruling in favor of eminent domain seizure in New London Connecticut last week.

It's hard to know where to start with this juicy issue. I will just make a passing reference to the policy windfall this represents for Wal-Mart and other strip mall developers (see CNN piece on this angle).

More directly related to social sector policy is the emerging "public purpose" debate. Until now, and according to the owner of the home that will now be seized, eminent domain rules transfer private property to the public sector for public use (road, utility, etc.). As a result of the ruling, it seems that as long as there is a comprehensive economic development plan, property may be transfered from one private part to another private party.

The Supreme Court (and the City of New London) is asserting here that the public and private sectors have the same (or greater) potential for positive social impact. What's new here? All sorts public purposes have been handed off to private companies. Public-private partnerships are particularly common in real estate development, and I'm only surprised that this is issue is only coming up now.

This is just another sign that the barriers between the public, nonprofit, and private sectors are breaking down. I continue to be excited about real social impact trumping outdated legal distinctions, but I am also concerned that (despite the PR campaigns) corporations are not quite ready to takeover many critical societal functions. For example, will poor people in New London benefit from this sweeping economic development plan, or will they get priced out as big box stores move in?

(Is anyone else reminded of the "Hitchhiker's Guide to the Galaxy?")

Dean Zerbe Decries "Lazy Intellectualism"

2005-06-13T14:23:00.000-07:00

In the current issue of the Chronicle of Philanthropy, Chief Investigative Counsel for the Senate Finance Committee, Dean Zerbe, accused the nonprofit community of "lazy intellectualism."

I like the sound of this concept, but what does it mean?

In the interview, he seems to be simply saying that the sector is not coming up with any good ideas for cracking down on abuses because it's not in their interests. That doesn't sound very "intellectual," and "lazy" isn't a very good descriptor either.

Maybe he is trying to say that there are a lot of very smart minds working on this issue, but their talent is being squandered on technicalities. (As a lawyer, I would have thought Zerbe would be familiar with this phenomenon.)

If this is what lazy intellectualism means, I approve of its usage. Maybe Zerbe and I can be the next Newt and Hillary. We can make a bipartisan call for a wholesale rethinking of what this eclectic sector is all about. That's what is needed, and we've certainly got the under-utilized intellectual capital with which to do it.

Social and Financial Problems Dominate Wal-Mart Annual Shareholders' Meeting

2005-06-02T04:54:00.000-07:00

Ahead of today's Wal-Mart Annual Shareholders' Meeting at its lovely Home Office in Fayetteville, Arkansas, a bunch of investors are pressuring the retail behemoth on recently exposed problems. According to today's Financial Times, a group of UK institutional investors have just joined Illinois and New York pension funds in a call for Wal-Mart to address:

- $11 million federal penalty for using illegal immigrants to clean their stores
- child labor in overseas factories
- grand jury investigation concerning recently resigned Vice-Chairman, Thomas Coughlin

The meeting will also feature a performance by the famously care-free musician Jimmy Buffett, and an appearance by Will Smith. And I don't think they were specifically invited, but the United Food and Commercial Workers Union will also be there to promote their Wake Up Wal-Mart Campaign.

While Wal-Mart stock has been stagnant for the sixth straight year and concerns about profitability are very serious, Wal-Mart represents the kind of confluence of market and social concerns we have mostly been imagining so far. Of course we would prefer to see the confluence of POSITIVE financial and social results, but at least the relationship between these two bottom lines is becoming more apparent.

There was an article in the May 12th Chronicle of Philanthropy presenting a similar approach to problems like these: proxy voting.

Separated At Birth: Shell & Halliburton Spokespeople

2005-06-01T05:42:00.000-07:00

Perhaps this is more a commentary on the ad industry than on these two infamous multinationals, but Royal Dutch Shell and Halliburton have simultaneously launched very striking--and strikingly similar--print ad campaigns. You be the judge: Shell ad, Halliburton ad.

The campaigns both focus on smart, young, short-haired, and progressive-seeming European women whose example I would normally follow without hesitation. These women tell us a little about their jobs and environmental values, and then endorse the corporations.

Sporting her Elvis Costello glasses, "Helen O'Connor" is apparently brimming with pride as an environmentalist AND a Halliburton employee. She claims that her expertise allows Halliburton to drill fewer holes for oil wells, thus creating an environmental net gain.

The alluring Spanish designer and entrepreneur, "Anna Xarau," is apparently a Shell fossil fuel consumer. According to the ad, she is psyched that her electricity is produced with liquid natural gas rather than crude oil, which burns cleaner.

Conservatives Harness the Power of Ideas

2005-05-31T07:41:00.000-07:00

"The ideas have to be tended to. Only after that can you tend to the policies." These were the words of James Piereson, the head of the conservative John M. Olin Foundation, as quoted in Sunday's NY Times. (The article was about the Olin Foundation claiming victory and deciding to spend itself out of existence "within a generation." Olin was an important benefactor for the Federalist Society, Allan Bloom, and Charles Murray.)

If it is at all possible to leave politics aside, this concept is intriguing. Piereson concerns himself with the big ideas and rather disdains "public policy sorts of things." And his bias is in favor of economics, curiously claiming that "economic analysis tends to have a conservatizing effect." And not only does he favor big ideas over technocratic solutions, he also takes a long view of things: "It can take twenty years to have a serious impact."

While I find the substance of Piereson, Olin, and the Federalist Society deeply disturbing, their methods are not unlike those I have been pushing for in this blog (i.e., meaningful change requires a big picture perspective and tends not to show immediate quantifiable results). For the right, these methods seem to be working quite well.

House and Senate Both Take a Look At Non-Profit Hospitals

2005-05-27T06:28:00.000-07:00

The AP (summary) and the NY Sun (full coverage) both report today that the House Ways and Means Committee is now joining the Senate Finance Committee in its inquiry into nonprofit hospitals. In addition to a whole bunch of scandals first reported in the Boston Globe in 2003 (requires free registration), the tax status of nonprofit hospitals was one of the original concerns that prompted the Finance Committee's Hearing on Charity Oversight and Rerform a year ago.

Everyone is asking, "What's the difference between a for-profit and nonprofit (or government run) hospital, anyway?" These days they all do community outreach, health fairs, etc.

What's at stake here, you may ask? The risk is that hospitals will loose their nonprofit status and thus one important incentive to do good. Doing good includes not only only the community stuff, but also providing care for the indigent, uninsured, or undocumented (those expenses add up quickly).

The promising part of this inquiry is that we are watching Congress slowly come around to a perspective that we have been discussing here at Social Edge for a while now: Our modern reality is not simplistically bifurcated into nonprofits doing good and corporations making money. From Wal-Mart to Save the Children, all entities must start considering both social impact and market forces. Public policy governing the social sector will perform better when it reflects this reality. Let's see how far the feds get in their exploration of this sector.

Sometimes Good Ideas Come From The Academy (Remember Them?)

2005-05-26T10:30:00.000-07:00

The links between academia and current issues are not as strong as they could be. The space has been taken up by think tanks, corporate interests, and the religious community. Yesterday's New York Times picked up on one group of undergraduate students at Stanford University who want to regain some of this influence. They call themselves The Roosevelt Institution. On the graduate level, many policy (MPA/MPP) programs are making attempts to be better connected to current issues and actual organizations, but the results are not impressive. While this group of undergrads covered in the NYT article are creating affiliates all over the country, hopefully they will motivate administrations and their graduate counterparts to become more relevant.

(Bridging this gap between public policy programs and actual nonprofits/NGOs also happens to be a core priority for Policy Development.)

Venture Philanthropy's Dirty Secret

2005-05-25T11:53:00.000-07:00

If you want to be popular, don't disparage new and market-savvy approaches to social change. In fact, don't disparage market-savvy approaches to anything.

Well, judging from his forthcoming chapter in Victor Ginsburgh and David Throsby's (eds) Handbook of the Economics of Art and Culture, Stan Katz thinks it's more important to be insightful than popular. Excerpted with permission:

"The older and more mainstream foundations would deny it, but it is likely that the most important recent change in foundation behavior has been a movement to imitate the management strategies of the conservative foundations. Over the past decade a series of new foundation management rationales have developed, and along with them a consultant industry (mainly drawing on business school models and experience). The new calls are for 'effective,' 'strategic,' or 'venture' philanthropy, and each of these is essentially a business management point of view. Of course philanthropic foundations, from the very start, have always had investment strategies, and they have always desired to be effective, but their styles were more patient, relaxed and generous.... The result [of this trend in philanthropy] appears to be a retreat from research, from long-term programming, from goals that cannot be quantitatively measured, and from programs that do not promise hard-edged social/economic results."

To this list of newly unpopular activities, I would add policy, advocacy, and in general, projects whose goals are systemic change.

Anticipating Wolfowitz, World Bank Questions Its Own Social Agenda

2005-05-22T14:42:00.000-07:00

Curious timing.

Event #1: A World Bank President known for boosting the social agenda (Wolfensohn) is being replaced by the US Deputy Defense Secretary considered by both parties to be the mastermind of the Iraq War and for founding the Neocon movement (Wolfowitz). (See May 16 post.)

Event #2: A new report is released by the World Bank's independent evaluation division recommending that the Bank de-emphasize its social agenda in favor of the kinds of grand infrastructure projects it used to be known for. FT coverage ($), Finfacts coverage (free).

It looks like Wolfowitz's agenda has just been achieved--and he won't even arrive on the scene for another two weeks. Now he can walk in, reinstate a couple token feel-good social projects, and come away looking like a true humanitarian. How did this happen?

Caveat: The nitty gritty of the report is, as you might have guessed, a little more technical than that. The reason given for de-emphasizing the social agenda is not that social issues are unimportant, but the projects weren't working. In particular, it is the poorest people who are not benefiting, according to the report.

Bush Administration's Democracy Double Standard Revealed in Russia

2005-05-22T09:46:00.000-07:00

During US Secretary of State Condoleezza Rice's trip to Moscow last month, Rice said some striking things. In a radio interview (covered by the BBC), she commented on Russian Oligarch Mikhail Khodorkovsky's trial by declaring that "there should not be so much concentration of power just in the presidency...." She went on to say that "Everyone will be watching to see what the Yukos case says about the rule of law in Russia." This posture is meant to perpetuate Washington's benevolent democracy message globally. But what a double standard. In historic proportions, Putin and Bush are both agressively consolidating executive power--especially at the expense of judicial independence and legal precedent.

And while Putin does seem to be intent on punishing Khodorkovsky regardless of the law, Khodorkovsky and his fellow oligarchs (who are collectively referred to as Russia's "Cleptocracy") do desperately require remedial state action. After Russia's financial crisis in 1998, even the US corporate sector was calling for the re-nationalization of Russia's energy sector (and others). Left alone, Russia's oligarchs represent as large a threat to democracy as Putin's show trial.

Russia and the US both need to restore democracy and civil society--and ending the power grab is indeed how it must happen. But Rice lecturing to Russia on exactly these topics is surreal, and shows just how far the Bush Administration is from even recognizing its own excesses.

Wal-Mart Irony, or Long Tradition of "Robber Baron Philanthropy?"

2005-05-13T08:21:00.000-07:00

I suppose Wal-Mart is not quite admitting it has destroyed the American landscape, but one cannot escape the irony of Wal-Mart Heiress Alice L. Walton's appreciation of this exquisite pre-industrial naturalist painting by Asher Durand that, according to today's NY Times, she just purchased for over $35 million. In the painting, "Kindred Spirits," Thomas Cole (painter) and William Cullen Bryant (poet) are standing together marveling at a lush and pristine Catskills scene. As I wistfully recall from my college courses with Robert Warde, this period in art and literature marked a profound reluctance about the nascent industrial era and its grave implications for labor conditions, the environment, and the state of society more generally. Now compare Durand's work to Walton's father's work. I dare say Durand's and his contemporaries' fears were well-founded at the end of 19th century, and Ms. Walton's desire to turn back the clock may be a little too late.

Caveat #1: Then again, for the thirteenth wealthiest person in the world (tied with her widowed mother, whose husband founded Wal-Mart), $35 million might not mean that much.

Caveat #2: "Robber Baron Philanthropy" is an accepted term of art among historians and philanthropy researchers, deriving from the very origins of modern philanthropy, when captains of industry like Andrew Carnegie, John D Rockefeller, and many others suddenly transformed themselves from merciless oligarchs to benevolent patrons of the humanities, civil society, conservation, and human welfare generally. In this context, Ms. Walton and Wal-Mart are just the latest examples of this well known phenomenon. Irony seems more like the name of the game.

"Safeguarding Charity in the War on Terror"

2005-05-11T13:32:00.000-07:00

Sounds serious. I can't be there, but this sounds like a good conference:

Safeguarding Charity in the War on Terror:
A panel discussion on the post 9/11 regulatory environmnet and its impact on US foundations and the nonprofit sector

Tuesday, June 14, 2005, 4:00 - 6:00 p.m.
Georgetown University, Copley Formal Lounge

Panelists:

David Cole, Professor of Law, Georgetown University Law Center
Laila Al-Marayati, Chairperson, KinderUSA
Daniel Mitchell, The Heritage Foundation
Aryeh Neier, President, The Open Society Institute (unconfirmed)
Teresa Odendahl, Nielsen Chair in Philanthropy, GPPI / CPNL

Sign up here

Massachusetts AG Missing Opportnity to Fix Charity Oversight

2005-05-11T06:18:00.000-07:00

Massachusetts AG, Thomas F. Reilly, is announcing new rules for nonprofits today. This is the state (MA) and the paper (Boston Globe) where many of the financial scandals at foundations first broke, so it makes sense that the AG is doing financial stuff. But that is a waste of an opportunity. As we have pointed in out in our original social edge discussion on this subject, and in the related Chronicle of Philanthropy piece, state-based AG-driven charity oversight and reform should be about different stuff. As Stan Katz and others point out, let the feds have tax and financial oversight. States must enforce and improve trust law. Trust law gets right to the heart of what nonprofits (are supposed to) do. Being more aggressive about trust law could enable AG's to see if nonprofits are actually accomplishing their mission, having social impact, or at least trying to.

Of course board members should not be lining their pockets with money intended for social purposes, but this is surely a very poor proxy for what we should really be concerned about: social impact. Hey AG's, leave auditing to the IRS and learn some new tricks.

Wal-Mart Woes [UPDATED]

2005-05-08T06:50:00.000-07:00

I've wanted to write about Wal-Mart for a few weeks now, but I haven't been able to figure out how to make the connection to social sector policy. Rejoice, I've got it. An underlying theme of this blog has been how to get ALL entities--regardless of tax status--to deliver some degree of (positive) social impact. To me, that is the secret explanation for replacing the term "nonprofit sector" with "social sector." That's where the idea of corporate social responsibility comes from, and that's why Wal-Mart's making headlines these days.

Where do you begin with a juggernaut like Wal-Mart? The NY Times alone has had two big articles on Wal-Mart just this week (Today's article, Wednesday's article). And this striking full-page ad by Walmartwatch.com also ran in the Times.

The current concerns are about low wages (for American workers) and health benefits. But why stop there? Wal-Mart is profoundly implicated in sprawl issues, substandard labor conditions in overseas factories, the demise of Main Street and locally-owned businesses, etc. Where I live, there are already two Wal-Marts four miles apart, and one is trying to expand its already ginormous store into a "Superstore." To do so, it is paving over tens of acres of farmland, open space, wetlands, etc. In order to satisfy my state's seemingly progressive "net zero loss" wetlands regulations, Wal-Mart is using a water retention facility UNDER its parking lot to justify wetlands destruction.

This is about more than Wal-Mart, so when they put on a great PR show for us, (like Exxon after Valdez), let's not loose track of the Home Depot's, Lowe's, etc. whose combined effect is more powerful than anything the public or nonprofit sector has to offer in response.

UPDATE: Here is an even better response to Wal-Mart's new Enviro-spin Campaign from Stacy Mitchell (senior researcher with the New Rules Project, a program of the Institute for Local Self-Reliance, author of "The Hometown Advantage: How to Defend Your Main Street Against Chain Stores and Why It Matters.")

The Google Foundation Threatens to Break The Mold

2005-05-02T06:50:00.000-07:00

By making grants to for-profits, The Google Foundation is obviously trying to prove that for-profits can also have a positive social impact. As a result, two very different things could happen:

Scenario #1: Google's decision helps perpetuate the idea that perhaps all for-profits have a moral and shareholder responsibility to create positive social change--or at least "do no harm," thus helping to direct an unprecedented amount of resources to humanitarian priorities.

Scenario #2: Google diverts resources from nonprofit contributions, starving an already malnourished sector, and contributing to the euphoria surrounding "market solutions to social problems." There is indeed some promise to market approaches to social problems, and these days any realistic project must incorporate market-based elements, but the wholesale handover of social purpose work from the nonprofit/NGO/public sector to the corporate sector would be a man-made humanitarian disaster.

Is Google exporting social priorities to the corporate sector, or simply imposing more market pressure on the social sector? Time will tell.

The Auditors Get Audited

2005-04-27T17:55:00.000-07:00

Guess who got busted for runaway administrative overhead costs? The IRS! While the rest of us are seeing maximum allowable indirect cost rates reduced from the traditional 15% to absolutely nothing in many cases, the IRS audit turned up an employee tuition assistance plan that spends 61% of its budget just to run it. According to a just-released congressional inspector general audit (as reported by the Washington Post), the IRS spent $4.4 million administering $2.8 million of tuition subsidy for its employees in 2002 and 2003. I think these guys should get their own house in order before we give them more money for enforcing this kind of stuff in the nonprofit sector (as both the left and right seem ready to do).

Georgetown Conference: Why Can't Nonprofits Make Social Change? [UPDATED]

2005-04-23T04:35:00.000-07:00

A recenhttp://www.blogger.com/img/gl.link.gift conference on public policy and nonprofits put on by Georgetown’s Center for Public & Nonprofit Leadership descended into another "Where did the left go wrong?" session (with a little "Are labels useful?" for good measure). William A. Schambra, Director, Bradley Center for Philanthropy and Civic Renewal at the Hudson Institute, had one of the more interesting theories about this largely unresolved issue. Taking an historical perspective, Schambra blamed the romantic humanist/individualist movement of the left--which was a reaction to the rigidity of the socialist movement--for paving the way for our current "ownership society" and the decline of the welfare state.

Mark Rosenman threw out the Estate Tax issue and asked why foundations refused to take a stronger stand on such an absurd issue. He explained that the contributions to nonprofits that are jeopardized by eliminating the estate tax are equal to the contributions of the top ten foundations combined. (Plus it largely affects no one other than the super rich). No satisfying explanation was offered.

Commenting on the Charity Oversight and Reform debate, Emmett Carson, President and CEO, The Minneapolis Foundation, proffered that all foundations worth less http://www.blogger.com/img/gl.link.gifthan $100 million should be eliminated. Where did that come from? Emmett says that"the data shows that foundations worth less than $100 million aren’t effective." I didn’t get that memo. And as some others pointed out, small scale organizing and entrepreneurial spirit is what keeps this sector diverse, responsive, democratic, and vibrant.

The rest of the discussion grappled with the more practical matter of how to get foundations to fund policy activities which are inherently "non-direct services." We live in a hyper-specialized world where, increasingly, short term quantifiable results are nonnegotiable. Funders look for direct services in a very specific field and are happy to see overhead costs left out. Pablo Eisenberg (one of my heroes) took the unpopular position that an insurgence of corporate culture and conservative ideology has hindered meaningful work, especially when it is focused on some of the most difficult social issues where progress is slow, As a counterpoint, Cecilia Muñoz, Vice President, Office of Research, Advocacy, and Legislation at the National Council of La Raza, pointed out that she has no problem providing funders with short term measurable results. While Pablo may be right, until things change fundamentally, Cecilia may get the funding.

UPDATE: A trascript of the panelists' remarks (at least some of them) can be downloaded here (click on "Cost of Caution")

"The Paris Hilton Tax Cut" Hurts Nonprofits

2005-04-13T12:20:00.000-07:00

As I blog, the House is debating a repeal of the Estate Tax--what Washington Post columnist, E. J. Dionne Jr. calls "The Paris Hilton Tax Cut." Republican leaders have called for a vote and they think they've got it wrapped up. Independent Sector points out that the Estate Tax has been an important incentive for people to bequest their wealth to charities (rather than have it taxed). Something to the tune of $14.6 billion in 2003. But that's not the only reason to keep this tax. It's also a tax on the super rich: according to Robert Reich, "Half of all estate taxes collected by the federal government in 1999 came from 3,300 family estates." And from a blue state-red state perspective, who do you think is paying these taxes? The tax revenues are coming from th states where the super rich tend to live: Blue states!

Hearing on Charity Oversight Lurches Forward, Etc.

2005-04-12T09:18:00.000-07:00

Last Tuesday saw another session of the Senate Finance Committee regarding Grassley and Baucus' Hearing on Charity Oversight and Reform. Even though the place was packed, and there were star performances from the likes of Leon Panetta (former Clinton Chief of Staff), Mark Everson (IRS Comish), Brian Gallagher (United Way Pres.), and Diana Aviv (Independent Sector Pres.), the reason I am just getting around to covering it is that, frankly, there's not that much substance.

Yes, abuse is bad. So is criminal activity. Yes, we have to crack down and some of the solutions are sort of technical. But smart and caring social sector leaders are capable of more meaningful reform.

As you may recall from our kick-off Social Edge discussion on the topic, and my recent piece in the Chronicle of Philanthropy, I am hoping to 1) push beyond the important but obvious issue of vigilance, and 2) tackle the more interesting and equally important issue of large scale reform. For example, what the heck is "the nonprofit sector?" Does it mean anything anymore? How can we better organize ourselves? In addition to being an interesting, leading edge issue, I also think reconfiguring the sector has the potential to increase our social impact profoundly.

The buzz is that Grassley is keen to pass something in June. It looks like governance, self-dealing, and compensation and benefits will be the initial topics to be addressed.

In addition to this session, there will be "Field Hearings" around the country. See if you can show up at any of them and help us refocus the debate. Or do it online.

Diana tells me "One thing at a time" [not a direct quote]. But until our issues make it into the debate, I'll just watch.

UPDATE: Adding a little more fresh air to this debate, I refer you to a slightly rebellious speech by Lorie A. Slutsky, President of The New York Community Trust, delivered to the membership of the Nonprofit Coordinating Committee of New York. I like Slutsky's rejection of indirect cost rates as a stand-in for social impact. And I like her reference to MBAs outnumbering real nonprofit professionals trained in social impact and nonprofit administration.

Slutsky refers to Tom Tierney, Chairman and Founder of Bridgespan, to help make these points. Isn't it funny how Bridgespan, originally feeared as the biggest MBA-clad carpet-bagger in the history of the social sector, seems to be on top of things? Originally suspicious myself, I have been consistently impressed with Bridgespan's commitment to social impact.

Colin Powell Really Out To Pasture

2005-04-06T06:02:00.000-07:00

Remember those halcyon days when Colin Powell served as a moderating force for Bush's right-out-of-the-gate radical agenda? Well, illustrating how far away from influence and decision-making he is now, Powell has popped up at the Indianapolis 500 as this year's Corvette pilot car driver. On second thought, perhaps he's lining up the "Nascar Dad" vote for his 2008 presidential bid....

McDonald's Gets a Storefront on Sesame Street: The Perils of Social Sector Commercialization

2005-03-28T19:42:00.000-08:00

Now let's get back to the primary focus of this blog (social sector policy). Commercialization of the nonprofit sector is a hot button issue that has not been addressed head on within the official Charity Oversight and Reform debate. And PBS (public television) is right at the heart of this controversial issue. Personallly, I've been dying to know how they get away with those pseudo-ads on NPR and PBS. Today's NY Times helps clarify ("On Public TV, Not Quite An Ad But Pretty Close," Business Day, 3/28/05)

One thing this article does is give a few ridiculous examples of non-ad ads. Sesame Street ends with a final credit: McDonald's--replete with golden arches and their motto "I'm lovin' it." [disclaimer: McD's is not a sponsor of this blog.] At the end of "Arthur" and "Barney and Friends" an unembodied voice recites Chuck E. Cheese's corporate slogan, but tacks it onto their show's name: "PBS Kids: Where a kid can be a kid." What are the limits, you may ask? A final ridiculous example: McDonald's-owned Chipotle Mexican Grill visually depicts the product (a burrito), which is a first, but they must not show people really enjoying it, saying superlative things about it, or comparing it to others. Huh?

According to the NYT, "many station managers" feel that more attractive ad opportunities are a financial necssity: public funding has not been increasing, apparently, as fast as the costs of programming. Then they adeptly use Rodney L. Bates, General Manager of Nebraska Educational Television, to point out that by running more ads, public television has less of a rationale for its public subsidy because it no longer looks distinct from regular TV. A few new multi-million dollar ads are not worth if they lead to the ultimate demise of public television entirely.

Commercializing other areas of the social sector may indeed help us meet our budget goals, but at what cost? Do we, as one station manager warns, "lose our soul?"

Can Resettlement Ever Work? BP Tries Hard

2005-03-28T19:31:00.000-08:00

Sorry it's been a little while since my last post, but I'm on the beach in Florida this week and the weather has been pretty good.

First, have you heard about New Onar. I bet not. Once again, the Financial Times has the exclusive ("The houses that gas built," 3/27/05). New Onar is one of two small Indonesian villages completely constructed by British Petroleum for resettled (aka displaced) families. BP is building a large LNG (liquid natural gas) field (worth $5 billion, according to the FT) where 700 people used to live.

What's noteworthy here is that BP is spending unprecedented amounts of money on attractive homes, electricity, sanitation, water sources, churches, mosques, security, and myriad additional services. It's all an experiment: Is there any imaginable level of compensation and technical assistance that could justify displacing indigenous people (even when they are relocating voluntarily)?

In the dubious extractive industries sector, BP seems to be emerging as the model corporate citizen. The FT attributes this to "corporate responsibility," which is encouraging, but it seems like the soaring price of oil is a more important driver for experimenting with incredible levels of compensation in exchange for access.

If it works here, it may set the standard for larger scale resettlements by BP and others. But the jury is still out on how this community is faring. Let's stay abreast. For example, what affect has the latest earthquake (reported today) had?

Risking 501c3 Status to Challenge Feds Regarding Advocacy

2005-03-21T07:44:00.000-08:00

Reported in today's NY Times, NAACP, OMB Watch, and others are accusing the IRS and other federal agencies of using reviews, audits, investigations, law enforcement, threats of loss of tax-exempt status, and other nasty things to punish nonprofits for advocacy. What kinds of advocacy? Advocacy that annoys the White House!

In response, the Inspector General of the Treasury looked into it--and found nothing to be concerned about. That is understandable. Trying to document that such things are systematic would be nearly impossible. But that doesn't mean it's not happening.

Advocacy and nonprofit status is a perpetual issue. For starters, many people think nonprofits are plainly forbidden from doing so. Not true! Only the most narrowly construed forms of lobbying are forbidden, and even then, up to 15% of your budget may in fact be used for even those kinds of activities. The reality is that most kinds of activities a nonprofit may consider in order to be meaningfully engaged in systemic change ARE legal.

To see how narrow the definition of lobbying is, take a look at this official letter of clarification from the IRS from Dec. '04 on this subject (www.clpi.org/doc_pdf/clpiIRS.pdf). Questions 11 and 12 on page 4 lay it out, and in doing so, clarify the important differences among certain key concepts: lobbying, advocacy, policy, regulation, analysis, and others.

I'd also like to point out that, for me, there is nothing interesting about this IRS letter until question 11. That's because, until that point, it is all technical discussion that assumes you are lobbying. Once the lens is widened and we consider what lobbying is and isn't, I get interested. Let me analogize to Charity Oversight and Reform: I don't have much use for discussions about adding an item on the 990, or editing an item on it. That's important stuff, but it is the big picture issues that are not getting enough attention (e.g., Is the "nonprofit" disctinction obsolete?). It is my hope that we can help widen the lens here, too.

All you could want to know about lobbying, advocacy, policy, etc.:
http://www.clpi.org/lobby_law_hm.html
http://www.independentsector.org/programs/gr/lobbyguide.html

Bottom line: We need you to be struggling for social change--to address to origins of the social problems, not just their symptoms.

Wolfowitz, Bolton, and the Return of Conditionality

2005-03-18T06:12:00.000-08:00

Paul Krugman makes a good point, buried in his scattered column in this morning's NY Times: The selection of Wolfowitz represents a return to aggressive conditionality in international development assistance.

Right now, you may be saying, "Of course. The US has a long history of tying aid to geopolitical interests (e.g., Egypt, Israel, etc). Wolfowitz's appointment simply represents an expansion of that doctrine." In fact, in the March 19 issue, even the Economist points this out: "His appointment tells the world that Mr. Bush wants to capture the World Bank and make it an arm of American Foreign Policy." The Economist even goes so far to say that "If that is his intention, it is a mistake."

But what was less publicized, and now completely overshadowed by this leadership coup, is that British development minister Hilary Benn announced earlier this month, in the FT, that "In the future, the UK will not seek to impose particular policy conditions" on international aid, and that "We're going to take this debate into the World Bank now." The policy shift was seen as symptomatic of a growing global consensus that conditionality can be counterproductive and unethical. The end of the Washington consensus/structural adjustment era seemed to be upon us.

Oh well. Perhaps there will be some difference between the traditional kinds of conditionality and what we will get from Wolfowitz. Meaning, before the agenda seemed to be fiscal austerity (translation: curtailing domestically popular social spending). Now, perhaps it will be more about democratization and the risks will be the divisive politicization of humanitarian purposes. But at least we'll have new things to complain about.

World Bank: Wolfensohn out, Wolfowitz in?!

2005-03-16T06:44:00.000-08:00

"President Bush to name Deputy Defense Secretary Paul Wolfowitz as his choice to head World Bank, senior administration official tells CNN."

What a disaster! I was at the World Bank HQ in Washington two weeks ago. The entire organization seemed paralyzed with fear and confusion about the monstrous possibilities for the successor to Jim Wolfenson. Sector Director confided, "It has brought us together." He explained that a normally rivalrous place has come together because of common concerns about the future of our work and the neediest populations the Bank serves. It was during this trip that I first learned about the possibility of Bono (yes, from U2) being appointed. As you may recall, John Snow, former US Sec. of Treasury toured Africa with him. I guess they hit it off, because it was Snow that suggested him. Anyway, he's Irish, and the post is customarily America (Europe gets the IMF). Wolfenson was Australian, but I think he became American.

But the bottom line is that, no matter your politics, Wolfowitz is generally acknowledged to be the mastermind of the Iraq War. So depending on how you feel Iraq is going, that may be the future of development assistance. I guess that leaves us (the social sector). This is a somber day at the Bank.

Also, Wolfensohn was always considered a tyrant on an inter-personal level, but I think many consider him to have updated the Bank's approach and--like Davos has done--responded quite affirmatively in many ways to the so-called anti-globalization/Washington consensus, etc. movement. And now Wolfowitz makes him look like an angel.

Kind of like how Condi Rice makes Powell (Colin, not Michael that rascal) look like Abbie Hoffman.

The Chronicle gives us a boost, and Diana Aviv may too

2005-03-13T20:06:00.000-08:00

This week's issue of the Chronicle fo Philanthropy features a piece that Stan Katz and I wrote based on the Social Edge discussion on the Congressional Hearing on Charity Oversight and Reform. I am hoping this will help elevate our alternative take on these issues.

Relatedly, I met with Diana Aviv last week to discuss this very issue. I told her how impressed I was with what she has been able to accomplish. Whatever additional priorities we may have, this level of participation in policy formulation is historically unprecedented. Diana has been hearing from everyone about every imaginable aspect of this stuff, but she genuinely appreciated that our concerns are unique and critical. She referred to some not-yet-released survey data which shows that there is more support among "regular Americans" for meaningful and substantive oversight (as opposed to reliance on tax law enforcement for example) than the current debate would suggest. We agreed to try and figure out how to collaborate. Any ideas?!

The Economist, "Moral Turpitude," and MBAs [Updated]

2005-03-13T19:08:00.000-08:00

The Feb 17 issue of The Economist ("School for scandal") defends a traditional, purist, and outmoded view of the MBA degree by attacking a theory about the "moral turpitude" of the MBA degree.

It is fair to say that, traditionally, business (and business training) has not considered ethics fundamental. This unfortunate tradition is perpetuated by The Economist's devotion to an oversimplified interpretation of Adam Smith's "invisible hand of the market" that even Mr. Smith would not have been comfortable with.

But even The Economist concedes that the times are changing. Both this article, and its recent "survey" (read: "dismissal") of the corporate social responsibility movement (tastelessly timed to coincide with Davos) reflect the healthy process of re-evaluation taking place within the business community.

That said, liberal economics has nothing to fear. While its traditional domain is being challenged, other domains are being won over. In terms of degree programs, even the top MPA (Master of Public Affairs) programs are desperate to incorporate elements of the market-savvy MBA degree. And in practice, any approach to social problems--like poverty or health care--must incorporate market mechanisms to be considered viable.

We are left with a convergence among disciplines. Inevitably awkward at first, these multi-faceted approaches seem better suited to the complexity of today's economic and humanitarian challenges. Thus we derive, using another approach, Jed Emerson's "Blended Value" continuum of financial and social return by which we might understand the activities of all kinds of institutions.

Caveat: I have a policy degree (MPA). The MPA has always had a little bit of a legitimacy problem. Loading up on quantitative coursework or becoming more business-savvy are sometimes seen as a solutions to this problem. But I see these efforts as sadly symptomatic.

Update: Today's (3/14/05) Financial Times has a two paragraph ditty: "New qualification aims to rival MBA." I guess MPA programs are not the only ones trying to grab a piece of the awesome MBA market share and cache. This new UK/Canadian degree hopes to attract "150,000 students over 10 years." The FT also gives this link: www.icaew.co.uk/corpfinfac

Systemic Change, and Mark Rosenman in the Chronicle

2005-03-12T20:25:00.000-08:00

We are still getting this superblog up to speed, so let me go back a few weeks and give a shout out to my inspiring colleague, Mark Rosenman. Mark's most recent piece, in the February 17 issue of the Chronicle of Philanthropy, Mark Rosenman warns the foundation community that it "will have little ultimate consequence for today's most critical issues if they focus principally on paying for immediate societal needs -- such as feeding the hungry or cleaning up rivers or mounting museum displays -- unless they also focus on finding ways to reduce the need for such support." According to Rosenman, "Key is whether philanthropy has the wisdom and the courage to provide money to charities that take on fundamental questions about the role and function of government."
("Grant Makers Must Focus on Government's Role," for subscribers:
http://philanthropy.com/premium/articles/v17/i09/09003501.htm )

This is, in fact, how we connect policy and practice. Traditionally, while community-based organizations address "immediate societal needs," think tanks and academics are left to explore the origins and potential systemic solutions to these problems. In Mark's view and my own, when these two groups dabble in each others' traditional domains, the benefits are mutual. For community-based organizations, greater engagement in policy contributes to program planning and offers new channels for addressing community priorities. For the policy community, connecting with practitioners is an opportunity to build policy and systemic reform on a foundation of authoritative, first-hand knowledge and experience.

This is a much longer story, but the point is that while we continue to help families meet basic needs in the US and abroad, we've also got to find ways to solve problems--and not just put Band-Aids on them. With support from the public and private sectors, we can do more. Indeed, we must do more. In this political climate, no quantity of Band-Aids may be sufficient to offset the policy changes taking shape.

Beyond Vigilance: The Missing Debate on Charity Oversight and Reform

2005-02-12T17:02:00.000-08:00

In December of 2004, Aron Goldman hosted an online event on social sector policy title, "Beyond Vigilance: The Missing Debate on Charity Oversight and Reform". According to Aron, "The current Congressional Hearing on Charity Oversight and Reform presents an historic opportunity to help shape the nonprofit sector."

Additionally, as a 2003 Kellogg Foundation report points out: "Any substantial increase in earned income by nonprofits, or the interlocking of corporate and board structures of for-profits and nonprofits, will stimulate legislative scrutiny. Should the philanthropic community invest in the thinking needed to 'get ahead' of this issue? Future legislation driven by the first scandal resulting from a for-profit/nonprofit hybrid could chill or possibly destroy this emerging marketplace of innovation."

Come check out the event and see what luminaries like Mike Burns, Jed Emerson, Marion Fremont-Smith, Stephen Heintz, Stanley Katz, Sara Melendez, Mark Moore and Katrin Verclas had to share!