The Wal-Marting of community philanthropy

This Business Week article on Wal-Mart's moves into financial services addresses the likely impact on community banks if the world's biggest retailer continues to expand its credit card, money transferring, payroll check cashing, and branch bank-affiliates model across its entire empire.

Community banks, long-time investors in local economies and staunch philanthropic allies to community foundations and other local nonprofits, have a tough-enough time competing against global banking behemoths. Wal-Mart's "everyday low prices" for money transfers put it smack in the middle of the multi-billion dollar remittance business. Perhaps it has plans to offer community development investments, mortgages, and small-business loans one aisle down from its payroll cashing service and just past the toilet paper and cleaning supplies.

If Wal-Mart continues down the path it has so far forged, community bankers, community philanthropists, and the big mutual fund companies and discount brokers have to ask: is philanthropy next? Might Wal-Mart launch the 21st Century version of Fidelity's Charitable Gift Fund?

Some are real and some are hypothetical...

Real developments in the world of philanthropic financial products:

According to the San Francisco Business Times, the Donor Managed Investment Fund introduced in 2004 by Winklevoss has landed its second client, a San Francisco Bay Area private school.

I received an email alerting me to new offerings from The Calvert Social Investment Foundation and Fannie Mae Foundation, which are predicted to grow the resources available for community investment projects (housing, job development) by making the trading of community investment bonds faster and easier.

Oddball musings about developments in philanthropic financial products:

In the November 2004 issue of Wired, Bruce Sterling raised the possibility of using social networks and network analysis to help scientists draw matching funds. Such an idea, which Sterling admits was influenced by work in the art world and the academy's citation index, would be generalizable to all philanthropic support if the network maps of programmatic, organizational and issue alliances and impacts could be developed. Maybe the next generation of foundation program officers will be customized versions of Friendster or Tribe?

Finally, James Surowiecki noted in his January 10th New Yorker column, The Catastrophe Problem that market interests have already created "catastrophe bonds" that allow buyers and sellers to trade in disaster insurance coverage. If the markets can create bonds for tsunamis and earthquakes, couldn't an enterprising banker come up with some new means of packaging philanthropic assets for development purposes, endowments for health insurance, or donor advised funds for college scholarships?

Will the nonprofit sector crash?

Here is one view of where nonprofits are headed. What do you think?

As the world shifts around us...

Modern American philanthropy has grown up within the social and economic contexts set over the last 100 years. For the most of those years (a period which captures the births of most of the nation's foundations) the social context in the nation has been expansionist. The social policy of the US has been set within the broadest reaches of the New Deal, the Great Society, and the civil rights and environmental movements. Yes, there have been waxing and waning trends in policies for elderly care, retirement, tax revenue, medical support, equal opportunity protection and preservation and conservation efforts, but for the most part the nation has been on a committed path of caring for our neediest, leveling opportunities, and trying to protect our natural resources.

This context has been critical to the shape and direction of modern American philanthropy - it has set the tone, the priorities, the opportunities, and the systems to which change might be made or alternatives offered.

So, what is the role of philanthropy to be in the next generation? Wither philanthropy in an "ownership society?"

As we move further down the path of the current administration to re-craft social security, fundamentally restructure the tax system, eviscerate environmental protections, and disregard global conventions on the treatment, privacy and protection of immigrants, foreign visitors (and citizens).

Changing social security systems reflects new assumptions and values about the role of society vis-a-vis the elderly and the role of the elderly in our society. The Patriot Act reflects significant changes in such age-old values as "innocent until proven guilty" and in the relationships between individual liberty and the purview of the state. Fostering extractive industries and refusing to invest in sustainable energy sources reflects a deep disregard for the health of our own children and grandchildren, not to many every other species on earth.

Where does philanthropy fit in this new framework? Will it offer alternatives? Fund the new mainstream? Reconsider systemic reform in favor of creating new systems? Established philanthropic organizations need to see this broader context as they set their own goals. New philanthropists should closely consider the historical relationships between philanthropy and the state and use those assessments to consider what types of structures, what types of actions, and what types of roles philanthropy can and should play against this changing public backdrop. And all of philanthropy's support organizations, vendors, consultants, leadership groups, networks and affinity groups or associations should be clear on where they fit in this changing set of values so recently reaffirmed by the voting majority.

Are you working with the current directions of the majority or against them? You have to know which way the tide is going in order to answer this question.