Tuesday, May 29, 2007

More networks and nonprofits

Info courtesy of Beth Kanter, here's another new social networking/fundraising/nonprofit portal - BringLight. This is more evidence of the trend discussed here.

I'm on my way to the NetSquared conference where I'm sure to find lots more examples of the intersection of social (change and technology). Will report back.

Tomorrow at Net2 I am serving as a moderator/reviewer in one of the conference's project review sessions - my assignment: Provide insight on the social impact elements of these projects - HELP, BigBrothersBigSisters, FreeCycle, and Kabissa 2.0. Send me questions or advice for these hard working folks.

If you're not headed to the conference you can participate in a back channel chat or remote sessions.

Friday, May 25, 2007

Facebook and Project Agape

I wrote about networks and nonprofits in a post on LinkedInforGood. Yesterday, in announcing its efforts to become the "social platform for the Internet," Facebook announced partnerships with Amazon, eBay, and Project Agape. This will allow the 24 million users of Facebook to promote nonprofits they support, raise funds, share information about causes - the networks come together.

Money chasing ideas or ideas chasing money?

Three of America's largest foundations are trying new ways to get ideas in the door. This is a good thing. These are all in early stages - and all worth watching.

The Rockefeller Foundation requests your ideas. As the site says - "we know we don't have all the answers." Check out the Foundation's online idea portal here.

The Packard Foundation is using a wiki to gather ideas on addressing nitrogen pollution. Access their site here.

The Robert Wood Johnson Foundation is hosting a "disruptive innovations in healthcare competition." Get info on this effort here.

Lots of people have observed over the years that the commercial sector sends money out looking for ideas, while philanthropy requires ideas to chase money. The three efforts outlined above are interesting expansions of this model.

I feel compelled to contrast it with an email a medical researcher/doctor friend of mine recently received from a VC firm - with names and details deleted, I'll paste it in below:

"My name is XXX and I work for YYY, a strategic consulting firm and NASD-registered broker-dealer. We assist companies with business plan development, market research, and raising capital. We have offices in Los Angeles, San Francisco, San Diego, and New York.

Many of the individuals and companies we work with are federal grant recipients who sought capital as the next step in their growth. One of our researchers found your name among a list of grant recipients. Are you currently involved with a project that currently needs, or will need, capital? If so, may I have one of our people contact you to see if we can assist you?


So, perhaps the old trope is true - in commerce the money will seek the ideas. But, at least philanthropy is becoming more innovative in how it lets ideas find its money.

Network effects, nonprofits, and crossing lines

LinkedIn is bringing its network platform to the nonprofit world - you can learn about nonprofit organizations and donate directly from the new nonprofit pages on LinkedIn For Good. Here's what they say about it:

"In addition, you can add a badge to your own LinkedIn profile to show your support and raise awareness for the causes you care about. When another member of LinkedIn views your profile and clicks on the badge, they’ll be taken to the nonprofit page where they can donate or add the badge to their profile, resulting in a virtuous cycle!

We’re also pleased to announce that LinkedIn is giving away free job postings to registered nonprofit organizations to support their hiring needs. If you’re looking for work in the nonprofit sector, search for jobs here. If you’re a hiring manager at a nonprofit organization, please contact us for more information by emailing nonprofits@linkedin.com."

I've been reading a lot about networks and community good, much of it the work of Pete Plastrik. His work, which has strong implications for philanthropy, can be found here. Plastrik is focused on community-based - not technologically-enhanced - networks, but many of the concepts are the same.

At the Investor's Circle breakout session on "The Evolution of Capital Markets" - Jay Coen Gilbert, founder of B Lab and Tim Freundlich of GoodCapital and Calvert Foundation handed out a slide showing a picture of the emerging capital market for public benefit. It was, they admitted, a work in progress. The Y axis was marked "infrastructure;" the X axis "Capital." Various investment possibilities ranging from philanthropic grants on the left end to social angels, PRI Debt and, finally, public markets all the way to the right end of the X axis. Up the Y axis were supporting actions such as "landscape definition," Standards/certification, up to transactional supports. Freundlich made the comment that a mature market place would have every inch of the graph covered, with multiple providers of each service/investment. At the moment, there is a fair amount of white space showing, though tools such as xigi.net serve to both build the network and display it.

The challenge for folks in this public benefit space is doing the work and trying to map it at the same time. The human networks are clearly strong in this space, and I was curious to ask repeat attendees of the Investors Circle conference what they've noticed in terms of change in the participants over the years. Its certainly grown, and some had the sense that this might even be the last time it was a "small group." As the ties within these networks grow stronger, they are also reaching further afield. In the online space whats happening is perhaps akin to the meeting of xigi and LinkedIn.

In the real world, making these connections requires individuals who cross between conferences, sectors, discussions, and expertise looking for common themes. Having transitioned immediately from Berlin and a foundation-focused and sponsored event about transparency into the Investors Circle discussions about developing public benefit capital markets I can say that these conversations are circling around the same sets of issues. As we increasingly look for and expect to find hybrid solutions to complex social problems - or perhaps as the B Corporation takes off - we will no doubt see these disparate communities come together as well.

Thursday, May 24, 2007

Think bigger - Phil Angelides

Phil Angelides, former State Treasurer of California who would have preferred an introduction as "the Governor of California" and who is now back in the private sector, as he put it, "by popular demand" addressed the Investors Circle conference. He congratulated the assembled for being on the vanguard of "tearing down the walls" between financial and social responsibility.

Said Angelides" "We need to think bigger. We need to mobilize capital to solve the major problems of society. Two of those problems, that must be solved, if we want a sustainable global economy, are:
  • Redress global poverty
  • Combat global warming
Capital markets - and those who manage them - Angelides presumes, want to keep the economy moving. Capital stewards need to be at the forefront of these fights. Major and small investments, policy actions, institutional and individual actions are all required to address these problems. Angelides argued passionately that moving capital toward solutions for poverty and global warming are in the self-interest of capital managers.

This is the key to the argument - any argument. Finding the way to meet the self-interest of those who disagree with you.

How to cause a ruckus - IC2007 Phil Angelides

In the philanthropy world the way to get attention it to suggest changing how foundations are taxed. For proof, see the comments on my earlier post, which decry my lack of understanding of endowments (I beg to differ) and others ignore my point about aligning investing policies and damn it for being a call for more taxes. The post got picked up by the Chronicle of Philanthropy and the Council on Foundations - now you know, want to get their attention? Mention taxes. Unfortunately, taxes were the means of the post, not the ends.

Since the panelists at the Investors Circle conference just put forward a powerful call for us (investors in society) to recognize that economic growth is not always possible or desirable and named the truth that no politician or economist will speak (negative growth is in our future), I know I won't be alone in getting angry, reactionary comments that pick up on single grains in a comment and ignore their larger points.

The point of philanthropy should be the application of private resources for public benefit. The point of tax structures to encourage philanthropy should be ensuring that public benefit, not simply encouraging the private "magnanimity." I said nothing about taking tax breaks from donors for for setting up endowments (although my anonymous commentators didn't seem to read the post that carefully). But inuring these endowments from taxes (with the exception of 2% on private endowments) in perpetuity, when the vast majority of these financial resources are used only as fodder for commercial capital markets amounts to a public subsidy for the investment management industry.

So lets get a conversation going on my point - how can we create incentives to get greater philanthropic use of philanthropic resources?

Gotta go - Phil Angelides, who turned pension plans into a major force for social good - is about to speak. Lets see who he can piss off by speaking some truth.

Investors Circle - plenary session

I just got a seat at the plenary session of the Investors Circle Conference. Speakers include Peter Kinder (KLD), John Fullerton (Alerian Capital), Joel Solomon (Renewal Partners Company) and Leslie Christian (Progressive Investment Management).

They've just answered the question "what is the purpose of capital?" Sustaining life is the shared answer.

Having taken on that easy question the panel shifts to a slightly more challenging question - "Don't the strategies deployed by the speakers defy the principles of risk management, maximizing return, and modern portfolio theory?"

As Kinder points out, reconsidering the reality of this theory - which, he claims, has ingrained "risk adjusted maximum return" into our common definition of fiduciary responsibility, requires taking on 6 Nobel winning economists who developed the theory. Say the panelists: "Hey, its just a theory." It ignores lots of risks that can't be quantified, it equates risk today with risk tomorrow, and it assumes the lives of our children are worth less than our own.

The rate of return that we should be interested in is the sustainability of the whole system.

In other words, we're off to a good start.

Research on philanthropy

New Aspen Institute Nonprofit Sector Research grants were just announced. They are:

Angela Eikenberry, Assistant Professor, Virginia Tech
Project: Giving Circles and Their Impacts on Donor Attitudes and Behaviors

Cynthia Gair, Director, REDF (formerly Roberts Enterprise Development Fund)
Project: Stepping Out of the Maze: Aligning to Improve the Nonprofit Capital Market

Marybeth Gasman, Assistant Professor, University of Pennsylvania
Project: A Growing Tradition? Examining the African-American Family Foundation

David Bonbright, Chief Executive, Keystone
Project: Realizing the Potential for Impact of Online Giving Marketplaces: Improving Performance Reporting

Two of these - Stepping out of the Maze and Realizing the Potential for Impact of Online Giving Marketplaces - are of particular interest to me as they go to issues at the heart of philanthropic capital markets. I'll try to connect with David Bonbright and Cynthia Gair to learn more and bring that information to your attention.

Tuesday, May 22, 2007

Aligning tax benefits with public benefits

Its always helpful to leave one's comfort zone to gain a new perspective. So, here I am in Berlin, wondering about the American tax system and its support for charitable activities.

And here's a thought - we should align the tax benefits for charitable giving with the amount of money that actually goes to charity. For example, the full corpus of an endowment is exempt from taxes, even though most foundations only spend a small percentage (around 5%) of their endowment earnings on charitable purposes. So the actual tax benefit ought to align with the charitable dollars - the 5% given in grants, not the 100% of the endowment which is in market rate investment vehicles.

If endowment managers can demonstrate alignment between their investment policies and their charitable missions, then the tax benefit would be extended to those investments. If a foundation invests 10% of its corpus in companies that serve a public benefit purpose in line with the foundation's mission, then the tax exemption would extend to include the 5% it pays in grants and the 10% of its endowment that it is using to achieve its mission. The other 90% of the endowment would be taxed.

After all, why are taxpayers subsidizing market-rate investment capital? Shouldn't public benefit tax exemptions be granted for public benefit activities?

Monday, May 21, 2007

"See(ing) through" philanthropy

I'm paraphrasing a paraphrase here: "There is nothing proprietary in philanthropy." Charles Schwab said something along these lines in the early days of setting up his family foundation. Of course, the line should read: "There should be nothing proprietary in philanthropy."

The comments that follow are my draft thoughts for a European conference on transparency in philanthropy. Here are six reasons why we will "see through" more of philanthropy in the future.

First, the demand for impact. No one philanthropic entity* has the money to solve the problems the entity claims to care about - Hunger. Education. Sustainable growth. Better foster care. AIDS. No foundation can achieve their own chosen goals by themselves. Those who set out to solve social problems and those who set up funds to support these efforts want to succeed. They are not satisfied with "feeling good," they want to do good. As they struggle to achieve their lofty, oft-hyperbolic, but well-intentioned goals, they are recognizing what those who have been doing this work for centuries also know - they need others, they need to work together. Doing so requires sharing ideas, tactics, resources and strategies.

Second, if you believe that what you are trying to do matters (see list above), enlisting the support of others is in your own best interest.

Third, the digital age has radically transformed our cultural expectations about transparency. Because we can find information so easily, we expect to find it. This is mostly true for the generations that have adapted to the digital age. It is the norm for those born into the digital age.

Fourth, markets demand transparency. Philanthropy is increasingly and publicly in the mix with markets, whether it be
  • the marketplace of solutions (NGOs, individuals, entrepreneurs),
  • the marketplace of philanthropic options (foundations, advised funds, commercial investments) or
  • the marketplace of ideas (X prize, research, competitive grantmaking processes)
Fifth, choices. NGOs and philanthropists have more choices now than ever before. Choice in funding partners, choice in funding strategies, choice in impact. NGOs can more efficiently seek lots of small gifts. Foundations can find NGOs more easily. Donors can find partners. The latent competitive nature of NGO funding and funder activity are becoming increasingly explicit as individual entities act on these choices. These choices will be driven by information access (transparency) - choice will increase the demand for information, information will increase the enaction of choice and the cycle will spread and deepen.

Sixth, (in the US) the tax benefits of philanthropy apply to all of the dollars in an endowment. The public sector supports private philanthropy by exempting the entire corpus, not just the dollars paid in grants or those invested in certain ways. The tax benefit itself isn't what it is important here - what matters is what that benefit represents - the public support for private philanthropy. And that support is granted to the entire entity - and all that it does. The public structure effectively says "there is a public benefit to the endowed dollars, the administrative dollars, the dollars used to fund research, the dollars used in grants, the dollars used in evaluation, etc." That public benefit is best served (and best protected) by, in fact, being public - or visible.

The conference where I must present some remarks starts today, my session is tomorrow. In the interest of transparency, I'll update these thoughts as the conversation unfolds.

*In fact, as I've said repeatedly, no one sector has the money to solve these problems, but more on that another time.

Thursday, May 17, 2007

Big ideas

Check out the big ideas here at the Modern Marvels/Invent Now. David Pogue (my idol) served as a judge and wrote about some of the winners here. This weekend in San Mateo, CA the 2nd Annual Makers Faire will let the rest of us jump in and invent something.

Having just spent a week talking with lots of people about the unacceptable state of inner city schools, I look at these nutty, creative, idea extravaganzas and wonder, "Why can't we build an educational system that sparks this kind of thinking, instead of the rampant inability to fill in little circles on a form?"

Tuesday, May 15, 2007

Everyone is an adviser

Boing Boing, a blog about technology, is running a story on "how to be a successful micro lender." It pulls from a longer piece in WIRED on micro credit.

I've written at length about the "unbundling" of philanthropic services. What do I mean by this? Once upon a time a donor could put her financial resources into a foundation, a community fund, or make a direct gift. That would serve as a "bundled option" of financial and advisory services. For example, an endowed foundation with professional staff was a bundle of financial service (endowment) and advisers (staff). A fund at a community foundation was another way of packing advice and financial products together.

With the introduction of commercial gift funds, the market proved that donors were interested in financial products separate from advisory services. These funds, introduced in the early 1990s, now account for more than $12 billion in philanthropic assets and one of their key selling points is "no advice, you the donor makes all decisions."

So what does it mean when technology magazines and blogs start offering philanthropy advice? It certainly seems to be a continuation of the unbundling trend. The financial options became products first - "psst, wanna buy a charitable gift fund?" Next - perhaps - is the commoditization of the advisory services.

Monday, May 14, 2007

Where in the philanthropy media sphere...?

(Warning: this post may not come through in email)

Flickr fans will be familiar with the game "Where in ____?" For the rest of you, this is a photo identification game. Players post photos of urban curiosities (making sure to remove any location-identifying elements), and others try to guess Where in San Francisco, New York, or where ever the tag indicates the photographed item/feature/landmark is.

What is amazing about this is how quickly certain photos get identified - some take mere minutes. And location is specific: acceptable answers are the along the lines of "on the southern wall of the corner building on the northeast corner of 25th Street and Folsom." "In the Mission" would not count as winning answer.

So, look at the Leaderboard below and tell me "Where in the philanthropy media sphere" this list comes from. You might also tell me what thoughts the list inspires in you.

Winner will get....something.


Ashoka $26,760$60,000
City Year $15,060$75,000
Creative Commons $15,980$60,000
Donors Choose $19,520$60,000
Oceana $20,380$60,000
Room to Read $27,140$60,000
Teach For
U.S. Fund for
Witness $18,220$60,000
World Wildlife