A money manager recently asked me: "Is it difficult for Excellence in Giving to find philanthropists who will pay for charity evaluations?" The simple answer is "yes." Although blogs and news articles are beginning to recognize the field of philanthropic advising, most big and small philanthropists do not recognize the value of paying experts to evaluate potential grantees. They do want to support the best organizations but typically balk at the idea of putting significant money into the necessary research that identifies high-performing, well-managed, difference-making nonprofits. Most of the time that hesitation results in donations given to a number of "good" organizations but not necessarily the "best." Sometimes it means donors unwittingly support scandalous frauds.
Last week an Excellence in Giving client sent a grant request from the Texas Highway Patrol Association & Museum (THPA) to our research team for review. A couple hours later we had scandal, suspicious money trails, and felonies in the report. First, the public financial records for THPA showed that the Executive VP's salary topped $193,000 but only $13,000 worth of benefits to Patrol Officers had been provided. That seemed suspicious. Second, of the $1.8 million collected for the benefit of TX Highway Patrol Officers, over $1.1 million was spent on staff salaries. That doesn't leave much to directly benefit officers. Third, THPA had provided a direct loan to its founder Lane Denton and used its assets as a loan or loan guarantee for a private for-profit company called THPA Services, Inc. Why would a nonprofit organization be sharing its assets with a for-profit company whose president, Lane Denton, is also the founder of THPA and the recipient of a THPA loan?
The research trail eventually led to Lane Denton's past. He is a felon. He was convicted in 1992 on felony charges for funneling money from a nonprofit organization to a friend's bank account. He received 60 days in jail and 6 years of probation. In 1993, he started a new nonprofit, THPA. He has 5 call centers in Texas with 312 employees who spend their days calling Texas residents asking for money. Employees at the call centers are taught to impersonate state troopers and recount the latest true story of a TX Highway Patrol Officer killed on duty. In FY 2009, the THPA fundraising machine turned the death of one officer into $1.8 million in donations. That officer's family received $10,000. That's a scandal.
If you ask me: "Is it difficult for Excellence in Giving to find philanthropists who will pay for charity evaluations?" The simple answer is "yes." But if you ask: "Is it worth it?" The answer is also "yes." Philanthropists can get a tax deduction for giving to great, good, or scandalous nonprofits. That part is easy. But making a difference takes diligent research and evaluation. In the end, paying for charity evaluations does save money. Money that could be wasted becomes an investment in the best organizations available.
Your joy in giving can move from the act of giving to the knowledge of changing lives for the better. But there is no short cut. It takes serious investment of your philanthropic capital. It will include paying for charity evaluations that provide you with confidence in your philanthropy. And the wisdom you apply to your giving will ultimately defund low performers and drive underhanded schemes out of business.
Read more!
Thursday, November 11, 2010
Monday, October 11, 2010
COMMUNITY ASSESSMENTS FOR STRATEGIC GIVING
How do you identify a community's most outstanding needs? How do you know what can effectively address those needs? How can you best leverage your charitable giving to support effective solutions? These questions are profoundly difficult to answer... but we think we can. And we do it all the time.
THE PROCESS
Excellence in Giving, LLC has developed a community assessment process that begins with a client's topic of interest and ends with strategic giving recommendations. The process is captured in the following graphic:
THE EXPLANATION
How does this topically-focused community assessment process promote strategic giving? Here is the short answer:
The community assessment process combines quantitative and qualitative research. EIG field researchers meet with over 50 of the most experienced community members who are informed about the topic. The interviews include mayors and judges, state representatives and police officers, for-profit and non-profit community leaders, and more. These guided conversations combine with a litany of community statistics, demographics, investigative reports, and other analyses to produce a final community assessment report with extensive evidence.
THE RESULTS
The sponsors of each community assessment end up with confidence in their giving. Whichever recommended option they choose, they know it is strategic. What do we mean by “strategic?” The recommended grants are strategic because each opportunity is explicitly tested against 3 criteria:
The increased confidence and impact that results from a topical community assessment cannot be underestimated. Too much giving has historically been based on hopeful intentions or an effective fundraising campaign rather than research-backed strategic decisions. That can all be changed in a matter of months.
Read more!
THE PROCESS
Excellence in Giving, LLC has developed a community assessment process that begins with a client's topic of interest and ends with strategic giving recommendations. The process is captured in the following graphic:
THE EXPLANATION
How does this topically-focused community assessment process promote strategic giving? Here is the short answer:
- The Topic of Interest makes the community assessment process feasible.
- The Needs Assessment identifies the most outstanding needs by removing small-scale needs and adequately-addressed needs.
- The Solutions Assessment identifies promising or proven progress where private funding can ‘move the needle‘ on an issue since gov't funding is not the main fuel for solutions.
- The Grant Recommendations provide a donor with options for making a measurable difference in areas of the community’s greatest needs.
The community assessment process combines quantitative and qualitative research. EIG field researchers meet with over 50 of the most experienced community members who are informed about the topic. The interviews include mayors and judges, state representatives and police officers, for-profit and non-profit community leaders, and more. These guided conversations combine with a litany of community statistics, demographics, investigative reports, and other analyses to produce a final community assessment report with extensive evidence.
THE RESULTS
The sponsors of each community assessment end up with confidence in their giving. Whichever recommended option they choose, they know it is strategic. What do we mean by “strategic?” The recommended grants are strategic because each opportunity is explicitly tested against 3 criteria:
- Outstanding Needs Addressed
- Program Success Indicators
- Community Value
The increased confidence and impact that results from a topical community assessment cannot be underestimated. Too much giving has historically been based on hopeful intentions or an effective fundraising campaign rather than research-backed strategic decisions. That can all be changed in a matter of months.
Read more!
Tuesday, August 17, 2010
What is a 'Fair' Performance Standard for Nonprofits? The Art of Philanthropic Due Diligence (Part 3)
None of us wants to be judged for not doing what we never tried to do. But it happens all the time. One nonprofit I recently critiqued responded with this exact complaint, "You can't say we have failed to become partially self-sustaining when we have not made that an explicit goal for the last ten years." The complaint was justified. I had to modify my critique to read: if a donor wants a self-sustaining model, this organization has not developed it in the last ten years.
So how do we create a 'fair' performance standard for measuring nonprofit outcomes? In the world of business investments, analysts can run the numbers and get a clear record of expenses, revenue, and profit. In the nonprofit world, measuring performance is more elusive. There is no absolute standard that applies equally to organizations operating in different program and geographic areas. The only fair approach is comparing the relative performance of organizations in the same sectors.
A recent study by Hope Consulting found that 85% of funders wanted to fund effective organizations. However, only 3% of all funders evaluate the relative performance of grantees. That is a significant disparity. It is the proverbial difference between good intentions and strategic giving. It is also the reason why my business isn’t booming (evaluating the relative performance of nonprofits in select geographic and programmatic areas happens to be my specialty).
How does one check the “relative performance” of a nonprofit? It takes proper data collection, some experience, and some time. For example, I just compared the performance of a string of nonprofits serving the homeless population in Fort Worth, TX. I gathered the numbers on how many distinct clients were served. I identified the types of services offered at each organization. I found out how many meals were served. I added up the number of clients placed in paying jobs, and I counted how many homeless individuals now lived in independent housing. With these statistics on both the organization’s outputs (program activities) and outcomes (lasting impact), I could analyze their relative performance.
A couple homeless service providers boasted greater outputs: the most meals served and most overnight stays. A couple other service providers boasted the best outcomes: the most job placements and most program graduates in independent housing. Those numbers gave me the relative performance of homeless service providers in Fort Worth. All that remained is a personal decision about what type of results were most meaningful. In this particular case, our clients most valued the outcome of drug-free and employed individuals who found long-term housing arrangements. We concurred.
Without analyzing “relative performance” in similar sectors, nonprofits can fall victim to unfair absolute standards. For example, Charity Navigator has spent years analyzing all nonprofits based on the percentage of money spent on Administrative & Fundraising costs versus Program costs. Their absolute standard that downgrades a nonprofit for having 32% instead of 20% of their annual budget in the former category is unfair (to their credit it is being changed next year). A nonprofit that does weekly case management with hundreds of struggling families will need more personnel than an organization that acquires and distributes medical equipment for the elderly. More staff will lead to higher administrative costs from additional office space, equipment, benefits, and insurance needed. It is inappropriate to judge both organizations by some universal standard.
The inequity of absolute standards can take many other forms. A common pitfall is the “most bang for the buck” principle. For example, a school outreach program may “reach” 70,000 children for only $280,000. That is $4 per person. Should a donor choose that type of efficient performance when compared to a holistic, residential urban program for 18-30 year olds that provides housing, tutoring, college tuition, counseling, and financial education at the price of $35,000 per person per year? The same $280,000 could allow a donor to reach either 70,000 children or 8 guys. Wouldn’t you go for the “most bang for the buck”? The fact is to compare the performance of these organizations is unfair. One goes deep for 3 years with each individual while the other is wide and has 2 hours of contact with each child.
At the end of the day, we must compare the outputs and outcomes of organizations operating in similar areas with similar programs. Throw the unfair absolute standards out the window. We must raise the statistics far higher than the current 3% of donors who evaluate “relative performance.” If this happened, some nonprofits would lose all their funding when the public sees that they have good intentions but not great performance compared to others. Good. Other nonprofits would be given the chance to stand out from the rest. If charitable giving choices reflected the relative performance of organizations and not their marketing or networking success, philanthropists would not only be fair but also more effective.
Read more!
So how do we create a 'fair' performance standard for measuring nonprofit outcomes? In the world of business investments, analysts can run the numbers and get a clear record of expenses, revenue, and profit. In the nonprofit world, measuring performance is more elusive. There is no absolute standard that applies equally to organizations operating in different program and geographic areas. The only fair approach is comparing the relative performance of organizations in the same sectors.
A recent study by Hope Consulting found that 85% of funders wanted to fund effective organizations. However, only 3% of all funders evaluate the relative performance of grantees. That is a significant disparity. It is the proverbial difference between good intentions and strategic giving. It is also the reason why my business isn’t booming (evaluating the relative performance of nonprofits in select geographic and programmatic areas happens to be my specialty).
How does one check the “relative performance” of a nonprofit? It takes proper data collection, some experience, and some time. For example, I just compared the performance of a string of nonprofits serving the homeless population in Fort Worth, TX. I gathered the numbers on how many distinct clients were served. I identified the types of services offered at each organization. I found out how many meals were served. I added up the number of clients placed in paying jobs, and I counted how many homeless individuals now lived in independent housing. With these statistics on both the organization’s outputs (program activities) and outcomes (lasting impact), I could analyze their relative performance.
A couple homeless service providers boasted greater outputs: the most meals served and most overnight stays. A couple other service providers boasted the best outcomes: the most job placements and most program graduates in independent housing. Those numbers gave me the relative performance of homeless service providers in Fort Worth. All that remained is a personal decision about what type of results were most meaningful. In this particular case, our clients most valued the outcome of drug-free and employed individuals who found long-term housing arrangements. We concurred.
Without analyzing “relative performance” in similar sectors, nonprofits can fall victim to unfair absolute standards. For example, Charity Navigator has spent years analyzing all nonprofits based on the percentage of money spent on Administrative & Fundraising costs versus Program costs. Their absolute standard that downgrades a nonprofit for having 32% instead of 20% of their annual budget in the former category is unfair (to their credit it is being changed next year). A nonprofit that does weekly case management with hundreds of struggling families will need more personnel than an organization that acquires and distributes medical equipment for the elderly. More staff will lead to higher administrative costs from additional office space, equipment, benefits, and insurance needed. It is inappropriate to judge both organizations by some universal standard.
The inequity of absolute standards can take many other forms. A common pitfall is the “most bang for the buck” principle. For example, a school outreach program may “reach” 70,000 children for only $280,000. That is $4 per person. Should a donor choose that type of efficient performance when compared to a holistic, residential urban program for 18-30 year olds that provides housing, tutoring, college tuition, counseling, and financial education at the price of $35,000 per person per year? The same $280,000 could allow a donor to reach either 70,000 children or 8 guys. Wouldn’t you go for the “most bang for the buck”? The fact is to compare the performance of these organizations is unfair. One goes deep for 3 years with each individual while the other is wide and has 2 hours of contact with each child.
At the end of the day, we must compare the outputs and outcomes of organizations operating in similar areas with similar programs. Throw the unfair absolute standards out the window. We must raise the statistics far higher than the current 3% of donors who evaluate “relative performance.” If this happened, some nonprofits would lose all their funding when the public sees that they have good intentions but not great performance compared to others. Good. Other nonprofits would be given the chance to stand out from the rest. If charitable giving choices reflected the relative performance of organizations and not their marketing or networking success, philanthropists would not only be fair but also more effective.
Read more!
Wednesday, June 16, 2010
Differentiating between "Big Dreams" and "Strategic Plans": The Art of Philanthropic Due Diligence (Part 2)
I have had no time in the last 6 weeks to pause and post insights from my daily philanthropic due diligence work. The high number of evaluation, research, and advisory projects on my "to do" list has kept my nose to the grindstone. However, in the course of completing these projects I am employing every element I know from the art of philanthropic due diligence. So let me say a few words about nonprofit "Strategic Plans."
As part of our Levels 2-5 Due Diligence reports, we collect and analyze 1-3 year "Strategic Plans." It is my job to tell whether I am looking at a nonprofit's "Big Dreams" or realistic "Strategic Plans." There are a few giveaways that make the call an easy one. When the first line reads "Reach every child, everywhere," I'm staring at "Big Dreams." When a 2-year old organization serving 2,000 people sets a target for 220 million people in 10 years, again I am seeing "Big Dreams." The problem is not the audacity of the goals. The problem is the lack of feasible plans to achieve the goals in a specific time frame.
I recently evaluated a young educational organization that set the same budget and enrollment goals 3 years in a row. Each year they budgeted $950,000 and sought to enroll a critical mass of students that would let them break even. Each year they fell far short of their goals. In fact, they were raising less and less money each year. To make up for the financial shortfalls the organization set a new fundraising goal to establish an endowment. Not surprisingly no additional monies were raised. A person who does the same thing year after year and expects different results has had a break with reality. Setting goals based on the benefits of achieving them rather than their feasibility is life in a dream world.
You can put this scenario into the age-old analogy of drawing a line from point A to point B. Time and again nonprofit leaders envision point B. I come in and see point A. And no one can find the line between the two. In a recent conversation with a financial advisor, I was asked what has surprised me the most in my due diligence work. I did not have to think long about the answer. As I evaluate organizations each month I constantly find good intentions and big dreams. I rarely observe well-executed plans.
The next time you read or hear about an organization's plans and goals, look for the step-by-step instructions about how they will get from here to there. If you can't find a sensible price tag tied to a timeline of action items, you have entered a dream world. A "Strategic Plan" is not a set of goals that would be strategic were they to be reached.
If you want my advice, I'd say the reason that so many nonprofits produce "Big Dreams" instead of "Strategic Plans" is the absence of an experienced COO. The CEO/President/Founder who dreams up new goals each year needs a COO to chasten those dreams. The COO should refine them through a planning process. No doubt that type of relationship between a dreamer and the planner would produce friction. But that friction has the potential to produce realistic "Strategic Plans."
Read more!
As part of our Levels 2-5 Due Diligence reports, we collect and analyze 1-3 year "Strategic Plans." It is my job to tell whether I am looking at a nonprofit's "Big Dreams" or realistic "Strategic Plans." There are a few giveaways that make the call an easy one. When the first line reads "Reach every child, everywhere," I'm staring at "Big Dreams." When a 2-year old organization serving 2,000 people sets a target for 220 million people in 10 years, again I am seeing "Big Dreams." The problem is not the audacity of the goals. The problem is the lack of feasible plans to achieve the goals in a specific time frame.
I recently evaluated a young educational organization that set the same budget and enrollment goals 3 years in a row. Each year they budgeted $950,000 and sought to enroll a critical mass of students that would let them break even. Each year they fell far short of their goals. In fact, they were raising less and less money each year. To make up for the financial shortfalls the organization set a new fundraising goal to establish an endowment. Not surprisingly no additional monies were raised. A person who does the same thing year after year and expects different results has had a break with reality. Setting goals based on the benefits of achieving them rather than their feasibility is life in a dream world.
You can put this scenario into the age-old analogy of drawing a line from point A to point B. Time and again nonprofit leaders envision point B. I come in and see point A. And no one can find the line between the two. In a recent conversation with a financial advisor, I was asked what has surprised me the most in my due diligence work. I did not have to think long about the answer. As I evaluate organizations each month I constantly find good intentions and big dreams. I rarely observe well-executed plans.
The next time you read or hear about an organization's plans and goals, look for the step-by-step instructions about how they will get from here to there. If you can't find a sensible price tag tied to a timeline of action items, you have entered a dream world. A "Strategic Plan" is not a set of goals that would be strategic were they to be reached.
If you want my advice, I'd say the reason that so many nonprofits produce "Big Dreams" instead of "Strategic Plans" is the absence of an experienced COO. The CEO/President/Founder who dreams up new goals each year needs a COO to chasten those dreams. The COO should refine them through a planning process. No doubt that type of relationship between a dreamer and the planner would produce friction. But that friction has the potential to produce realistic "Strategic Plans."
Read more!
Wednesday, April 28, 2010
Analyzing an Organization's Totals & Trendlines: The Art of Philanthropic Due Diligence (Part 1)
"We've reached a total of 2.5 million people." I read claims like this one from many nonprofit organizations. The sheer size of the number is intended to impress potential donors. However, totals don't tell the whole story. One family ministry that has reached 2.5 million people in the last 34 years actually is in decline. The number of clients served has been dropping by thousands since 2006. In more alarming fashion donations have increased 18% during that time (significant for a $40 million operation) while clients served has declined 7%. Those trendlines tell the story that matters today. The organization's heyday has come and gone.
An informed practitioner of philanthropic due diligence is not easily taken by totals. The most valuable data is found in a time series not a "total" column.
Totals & Trendlines for a Healthcare NGO
A Healthcare NGO recently reported that they served 550,000 patients with donations of $1.1 million in 2009. So for every $2 donation 1 patient was served. Do these statistics mean that donors could increase the number of people served at $2 per patient? Not exactly.
In 2006 the Healthcare NGO was reaching 435,527 patients annually. In the last 3 years the NGO has increased the number of annual patients by 106,000 to an annual number of 541,124 patients (actual number is lower than their rounded numbers above). That is 24% growth from 2006 to 2009. In that same time period the NGO experienced a 117% growth in annual cash contributions from $570,000 to $1.24 million (actual cash contributions were higher than their rounded numbers above). If adding new patients only cost $2, then the NGO would have actually increased patients served by 335,000 people from 435,000 in 2006 to 770,000 in 2009.
The data in a time series tells the real story. It may have cost $2.29 per patient in 2009, but it cost $6.31 to add a new patient in 2006-2009. Another $100 donation would reach 16 more people not 50 more if they continue their historic paradigm for growth. That number is not bad. It is just important to be transparent.
Lesson for Smarter Giving
The next time you see a claim about the millions of people a nonprofit organization has served in one year or in its entire history, tread carefully. The total number might mislead you. The trendlines will tell you what their growth capacity is and if their actual impact is declining at present.
If you learn to find trendlines rather than totals, you are beginning to learn the art of philanthropic due diligence.
Read more!
An informed practitioner of philanthropic due diligence is not easily taken by totals. The most valuable data is found in a time series not a "total" column.
Totals & Trendlines for a Healthcare NGO
A Healthcare NGO recently reported that they served 550,000 patients with donations of $1.1 million in 2009. So for every $2 donation 1 patient was served. Do these statistics mean that donors could increase the number of people served at $2 per patient? Not exactly.
In 2006 the Healthcare NGO was reaching 435,527 patients annually. In the last 3 years the NGO has increased the number of annual patients by 106,000 to an annual number of 541,124 patients (actual number is lower than their rounded numbers above). That is 24% growth from 2006 to 2009. In that same time period the NGO experienced a 117% growth in annual cash contributions from $570,000 to $1.24 million (actual cash contributions were higher than their rounded numbers above). If adding new patients only cost $2, then the NGO would have actually increased patients served by 335,000 people from 435,000 in 2006 to 770,000 in 2009.
The data in a time series tells the real story. It may have cost $2.29 per patient in 2009, but it cost $6.31 to add a new patient in 2006-2009. Another $100 donation would reach 16 more people not 50 more if they continue their historic paradigm for growth. That number is not bad. It is just important to be transparent.
Lesson for Smarter Giving
The next time you see a claim about the millions of people a nonprofit organization has served in one year or in its entire history, tread carefully. The total number might mislead you. The trendlines will tell you what their growth capacity is and if their actual impact is declining at present.
If you learn to find trendlines rather than totals, you are beginning to learn the art of philanthropic due diligence.
Read more!
Monday, April 12, 2010
Are philanthropy advisors as important as financial advisors? A case for the difficulty of giving wisely
I remember the disbelief and near nausea of opening up my 401K quarterly reports between October 2008 and March 2009. Any of you who experienced the same shock know how suddenly you realized the need for a better investment strategy and a better financial advisor. After seeing thousands and tens of thousands of dollars disappear, you probably wanted to go back in time and pay any price to hire a savvy investment manager. At that point in time, no one needed to be convinced that trusting the system was dangerous and relying on your own allocation choices was inadequate.
I often wish we could receive the same quarterly reports on the effectiveness or ineffectiveness of our charitable giving. Can you imagine how much more seriously we would supervise our philanthropy?
Philanthropic Equivalents of Financial Investment Advice
In the world of retirement investments, 401K plans and IRAs offer an array of investment options. Some company plans simplify the decision-making of the investor by giving 3 choices: low-risk, medium-risk, and high-risk. Some plans let you do online “research” and allocate each dollar how you see fit. Other arrangements match you up with an advisor or let you use your preferred advisor to allocate your retirement investments. If you are one of the few to earn a higher income, you may have replaced these approaches with a family office of advisors who manage your wealth. Regardless of which option you have chosen for your retirement investments, it may surprise you that each one of these financial investment options is becoming available for your charitable giving strategy.
For small donors giving decisions can now be made by navigating online databases of charities (e.g., Network for Good or Global Giving) and choosing ones in a preferred program and geographic area. Online research and evaluation tools complement these databases to help inform your allocation of philanthropic capital. In a January 2010 BusinessWeek article “Rethinking Ways to Give Wisely” Amy Feldman suggested that (primarily online) nonprofit charity evaluators and resources are the best solutions for small donors who want to know they are making a difference with their donations. She points to online donor resources like Charity Navigator and GiveWell and to new financial advisor resources like Root Cause and Partners for Change. These philanthropic resources are essentially the functional equivalent of the do-it-yourself retirement tools that attempt to inform the smaller investor on a reasonable allocation of funds.
When considering the next step up in charitable giving advisory services Feldman concludes, “There are few places to turn for philanthropic advice for those giving less than $1 million.” Historically she is correct. It has been fairly standard to move from “giving on my own” to directing one’s giving through a foundation with paid staff--the equivalent of starting a family office in the financial world of wealth management. However, there is a burgeoning field of philanthropy advisors that can serve donors who contribute less than $1 million each year. I work for one such firm.
Although Excellence in Giving primarily provides customized and personalized philanthropic advisory services to families giving more than $1 million a year, Excellence in Giving also offers a “Giving Advisor” package (starting at $25,000 for a $250,000-750,000 annual donor) and a “Philanthropic Coaching” package (starting at $6,000 for a $75,000-250,000 annual donor). These services allow a smaller donor to access the knowledge base and network of a philanthropic advisory firm that serves dozens of family foundations. It is the philanthropic equivalent of the financial advisor who serves multiple clients and shares his ongoing research and insights among them all.
Do You Believe Effective Philanthropy Is Complex?
So why this shameless self-serving plug for my company? It is because people have yet to recognize the difficulty of giving effectively. Most people know that they need advice when it comes to financial investments. However, few have realized the complexity of deciding which one of the over 1.6 million U.S. nonprofits to fund. The decisions are even more complex than making financial investments because you cannot judge success in simple terms of profit and loss. Wise giving decisions grow out of a careful analysis of organizational governance, strategy, trackable impact, financial management, sustainability, and scalability. That kind of wisdom requires more than reading direct mailings, searching through online databases, or attending well-produced fundraisers.
In my service to faith-based clients I have often been disappointed with the theologically excused lack of due diligence. Centi-millionaires who have painstakingly researched business prospects and hired multiple advisors to make the best business decisions turn instead to impulses and coincidences for giving decisions. Some wait for nonprofits to approach them. Then they pray about the grant requests and wait for an internal sense of what to give. Or, they listen to one organization’s presentation and decide to give without knowledge of the sector in which that group operates or how that organization compares to others. However, none of them would take this approach to their business ventures and investment decisions. It ends up looking like hypocrisy: God can’t tell me which stocks to buy without independent analysis, but he can tell me where to give without any due diligence required. I am concerned that such theologically excused and consequently uninformed giving results from a lack of recognition about the complexity of effective philanthropy. Or, it may be a sign that giving is only an exercise of the heart's intentions and not an unyielding effort to transform other lives (see my 2009 post "Is Your Giving Actually About You?").
Future Growth for Philanthropic Advisors
When more people begin to recognize the difficulty of giving wisely, the field of philanthropic advising will grow. Right now online research and evaluation tools are experiencing the greatest growth, and I would predict that services tailored to advising multiple donors giving $25,000-100,000 will follow with notable growth in the next decade. Small and medium-size donors will eventually recognize the value in receiving impact reports on their giving like they do with their retirement accounts (a common EIG practice). The importance of tapping into expertise from philanthropic advisory firms will increasingly make more sense as donors attempt to distinguish between the good, the better, and the best organizations.
Of course, I may be blinded by my daily role as a philanthropy advisor. I could be too passionate about my work. I may be forgetting that ineffective charitable giving does not carry the same fearful effect as decreasing personal assets. So philanthropic advisors will never become as important as financial advisors. Then again, I may be privy to an inside story where smaller donors are accessing the research, knowledge base, and network developed through work with multiple donors who have a variety of interests. I may be witnessing a fundamental change in people's pursuit of social solutions and dissatisfaction with mere charitable intention.
The growth of philanthropic advising will ultimately be determined by people’s awareness of the complexity and engagement in smart giving. What do you think? Are philanthropy advisors as important as financial advisors? Or, are the less than 1% of U.S. nonprofits of which most people are aware actually the best organizations to fund for the causes you care about?
Read more!
I often wish we could receive the same quarterly reports on the effectiveness or ineffectiveness of our charitable giving. Can you imagine how much more seriously we would supervise our philanthropy?
Philanthropic Equivalents of Financial Investment Advice
In the world of retirement investments, 401K plans and IRAs offer an array of investment options. Some company plans simplify the decision-making of the investor by giving 3 choices: low-risk, medium-risk, and high-risk. Some plans let you do online “research” and allocate each dollar how you see fit. Other arrangements match you up with an advisor or let you use your preferred advisor to allocate your retirement investments. If you are one of the few to earn a higher income, you may have replaced these approaches with a family office of advisors who manage your wealth. Regardless of which option you have chosen for your retirement investments, it may surprise you that each one of these financial investment options is becoming available for your charitable giving strategy.
For small donors giving decisions can now be made by navigating online databases of charities (e.g., Network for Good or Global Giving) and choosing ones in a preferred program and geographic area. Online research and evaluation tools complement these databases to help inform your allocation of philanthropic capital. In a January 2010 BusinessWeek article “Rethinking Ways to Give Wisely” Amy Feldman suggested that (primarily online) nonprofit charity evaluators and resources are the best solutions for small donors who want to know they are making a difference with their donations. She points to online donor resources like Charity Navigator and GiveWell and to new financial advisor resources like Root Cause and Partners for Change. These philanthropic resources are essentially the functional equivalent of the do-it-yourself retirement tools that attempt to inform the smaller investor on a reasonable allocation of funds.
When considering the next step up in charitable giving advisory services Feldman concludes, “There are few places to turn for philanthropic advice for those giving less than $1 million.” Historically she is correct. It has been fairly standard to move from “giving on my own” to directing one’s giving through a foundation with paid staff--the equivalent of starting a family office in the financial world of wealth management. However, there is a burgeoning field of philanthropy advisors that can serve donors who contribute less than $1 million each year. I work for one such firm.
Although Excellence in Giving primarily provides customized and personalized philanthropic advisory services to families giving more than $1 million a year, Excellence in Giving also offers a “Giving Advisor” package (starting at $25,000 for a $250,000-750,000 annual donor) and a “Philanthropic Coaching” package (starting at $6,000 for a $75,000-250,000 annual donor). These services allow a smaller donor to access the knowledge base and network of a philanthropic advisory firm that serves dozens of family foundations. It is the philanthropic equivalent of the financial advisor who serves multiple clients and shares his ongoing research and insights among them all.
Do You Believe Effective Philanthropy Is Complex?
So why this shameless self-serving plug for my company? It is because people have yet to recognize the difficulty of giving effectively. Most people know that they need advice when it comes to financial investments. However, few have realized the complexity of deciding which one of the over 1.6 million U.S. nonprofits to fund. The decisions are even more complex than making financial investments because you cannot judge success in simple terms of profit and loss. Wise giving decisions grow out of a careful analysis of organizational governance, strategy, trackable impact, financial management, sustainability, and scalability. That kind of wisdom requires more than reading direct mailings, searching through online databases, or attending well-produced fundraisers.
In my service to faith-based clients I have often been disappointed with the theologically excused lack of due diligence. Centi-millionaires who have painstakingly researched business prospects and hired multiple advisors to make the best business decisions turn instead to impulses and coincidences for giving decisions. Some wait for nonprofits to approach them. Then they pray about the grant requests and wait for an internal sense of what to give. Or, they listen to one organization’s presentation and decide to give without knowledge of the sector in which that group operates or how that organization compares to others. However, none of them would take this approach to their business ventures and investment decisions. It ends up looking like hypocrisy: God can’t tell me which stocks to buy without independent analysis, but he can tell me where to give without any due diligence required. I am concerned that such theologically excused and consequently uninformed giving results from a lack of recognition about the complexity of effective philanthropy. Or, it may be a sign that giving is only an exercise of the heart's intentions and not an unyielding effort to transform other lives (see my 2009 post "Is Your Giving Actually About You?").
Future Growth for Philanthropic Advisors
When more people begin to recognize the difficulty of giving wisely, the field of philanthropic advising will grow. Right now online research and evaluation tools are experiencing the greatest growth, and I would predict that services tailored to advising multiple donors giving $25,000-100,000 will follow with notable growth in the next decade. Small and medium-size donors will eventually recognize the value in receiving impact reports on their giving like they do with their retirement accounts (a common EIG practice). The importance of tapping into expertise from philanthropic advisory firms will increasingly make more sense as donors attempt to distinguish between the good, the better, and the best organizations.
Of course, I may be blinded by my daily role as a philanthropy advisor. I could be too passionate about my work. I may be forgetting that ineffective charitable giving does not carry the same fearful effect as decreasing personal assets. So philanthropic advisors will never become as important as financial advisors. Then again, I may be privy to an inside story where smaller donors are accessing the research, knowledge base, and network developed through work with multiple donors who have a variety of interests. I may be witnessing a fundamental change in people's pursuit of social solutions and dissatisfaction with mere charitable intention.
The growth of philanthropic advising will ultimately be determined by people’s awareness of the complexity and engagement in smart giving. What do you think? Are philanthropy advisors as important as financial advisors? Or, are the less than 1% of U.S. nonprofits of which most people are aware actually the best organizations to fund for the causes you care about?
Read more!
Monday, March 15, 2010
Philanthrovestment: A philanthropic investment that shares returns with difference-making organizations
Where do you stand on the continuum between charitable giving without expectations and social capital markets that expect social and financial returns? Philanthropists and their advisors are staking claims all along the continuum. The balance many are seeking is to learn from the best business practices without overreacting against the beautiful simplicity of charitable intent.
David Hunter staked his claim in an October 2009 article entitled The End of Charity: How to Fix the Nonprofit Sector Through Effective Social Investing where he demanded that pure charitable intent (which he admits can degrade into “delusional optimism”) be replaced by social investors requiring demonstrated social impact. His passion is performance-based philanthropy. In a recent series of Tactical Philanthropy blogs Sean-Stannard Stockton has been pushing for the integration of philanthropy and social capital markets. In fact his review of the 2009 SoCap Conference in Alliance Magazine made such an impact that conference organizer Kevin Jones has created the Tactical Philanthropy Track for Sean to present his ideas at the 2010 conference. This momentum surfaces the question: what new ways can we combine smart giving that gets results and investments that produce financial returns?
Defining Philanthrovestments
>One answer is a philanthrovestment. A Philanthrovestment combines the characteristics of a grant with the financial returns of an investment. It targets giving opportunities that build the capacity of a nonprofit organization while providing ongoing revenue streams for operational sustainability. How does it work? To ensure that the capital injection will produce ongoing revenue for the nonprofit the recipient of the funds agrees to return a portion of the philanthrovestment to the philanthrovester at a designated time in the future. Since the philanthrovester is passionate about proving the viability of the new revenue streams and impacting humanity through the organizations services, there is a financial repayment but the the repayment is only partial. Then the philanthrovester has the opportunity to decide if another deposit into the nonprofit program is appropriate. That decision can be made based on the organization’s demonstrated impact or lack there of.
What does a philanthrovestment look like in action? Recently our philanthropic advisory firm Excellence in Giving sat down with a young microfinance organization in South Africa to create one. The US-based organization, Paradigm Shift, partners with South African churches who want to serve the poor by creating locally operated economic development programs that combine business training, microloans, and mentoring. For about $14,800 Paradigm Shift can launch the program, train volunteers to operate it, create a steering committee to oversee it, and establish a $10,000 revolving loan fund that serves approximately 175 entrepreneurs every 2 years. Once established the industry-low interest rate of 19.6% on the 5-month microloans can fully fund the program for years to come (taking into account currency risk). In this scenario a philanthrovestment is priced at $14,800 where $4,800 will be expended permanently on building the new program’s capacity while $10,000 (minus inflation) will be returned to the philanthrovester in 24 months. The philanthrovestment model would work for this organization because they require the local partner to buy out the microloan fund over the course of 2 years to ensure local ownership of the program. When we presented this “paradigm shift” to their executive director, their board approved it enthusiastically.
Philanthrovestment 2-step Diagram
The Potential for Philanthrovestments
The philanthrovestment represents one new medium that both invests carefully expecting a return and shares those returns with effective organizations out of love for humanity. In the case of a Guatemalan soccer organization that provides recreation, education, and personal development for children, we introduced one of our clients to a possible philanthrovestment that would produce a financial return and create operational self-sufficiency for their annual programs. Instead of giving a one-time $50,000 gift to cover a year’s worth of programming, a one-time philanthrovestment of $260,000 could build a regulation size Astroturf soccer field that would produce over $100,000 in rental profits annually. Those profits could be split 50/50 between the philanthrovester and nonprofit organization for the life of the field, or the philanthrovester could turn over all profits to the organization once the original amount is repaid and/or real social impact has been demonstrated for multiple years.
As philanthropists and their advisors continue to think critically about combining the best business practices and philanthropic goals, philanthrovestments should take their place alongside the best ideas. And if philanthrovestments sound to you like the right combination of accountability and love for humanity, then give us a call at Excellence in Giving to start maximizing your philanthropic portfolio and making a verifiable difference.
Read more!
David Hunter staked his claim in an October 2009 article entitled The End of Charity: How to Fix the Nonprofit Sector Through Effective Social Investing where he demanded that pure charitable intent (which he admits can degrade into “delusional optimism”) be replaced by social investors requiring demonstrated social impact. His passion is performance-based philanthropy. In a recent series of Tactical Philanthropy blogs Sean-Stannard Stockton has been pushing for the integration of philanthropy and social capital markets. In fact his review of the 2009 SoCap Conference in Alliance Magazine made such an impact that conference organizer Kevin Jones has created the Tactical Philanthropy Track for Sean to present his ideas at the 2010 conference. This momentum surfaces the question: what new ways can we combine smart giving that gets results and investments that produce financial returns?
Defining Philanthrovestments
>One answer is a philanthrovestment. A Philanthrovestment combines the characteristics of a grant with the financial returns of an investment. It targets giving opportunities that build the capacity of a nonprofit organization while providing ongoing revenue streams for operational sustainability. How does it work? To ensure that the capital injection will produce ongoing revenue for the nonprofit the recipient of the funds agrees to return a portion of the philanthrovestment to the philanthrovester at a designated time in the future. Since the philanthrovester is passionate about proving the viability of the new revenue streams and impacting humanity through the organizations services, there is a financial repayment but the the repayment is only partial. Then the philanthrovester has the opportunity to decide if another deposit into the nonprofit program is appropriate. That decision can be made based on the organization’s demonstrated impact or lack there of.
What does a philanthrovestment look like in action? Recently our philanthropic advisory firm Excellence in Giving sat down with a young microfinance organization in South Africa to create one. The US-based organization, Paradigm Shift, partners with South African churches who want to serve the poor by creating locally operated economic development programs that combine business training, microloans, and mentoring. For about $14,800 Paradigm Shift can launch the program, train volunteers to operate it, create a steering committee to oversee it, and establish a $10,000 revolving loan fund that serves approximately 175 entrepreneurs every 2 years. Once established the industry-low interest rate of 19.6% on the 5-month microloans can fully fund the program for years to come (taking into account currency risk). In this scenario a philanthrovestment is priced at $14,800 where $4,800 will be expended permanently on building the new program’s capacity while $10,000 (minus inflation) will be returned to the philanthrovester in 24 months. The philanthrovestment model would work for this organization because they require the local partner to buy out the microloan fund over the course of 2 years to ensure local ownership of the program. When we presented this “paradigm shift” to their executive director, their board approved it enthusiastically.
Philanthrovestment 2-step Diagram
The Potential for Philanthrovestments
The philanthrovestment represents one new medium that both invests carefully expecting a return and shares those returns with effective organizations out of love for humanity. In the case of a Guatemalan soccer organization that provides recreation, education, and personal development for children, we introduced one of our clients to a possible philanthrovestment that would produce a financial return and create operational self-sufficiency for their annual programs. Instead of giving a one-time $50,000 gift to cover a year’s worth of programming, a one-time philanthrovestment of $260,000 could build a regulation size Astroturf soccer field that would produce over $100,000 in rental profits annually. Those profits could be split 50/50 between the philanthrovester and nonprofit organization for the life of the field, or the philanthrovester could turn over all profits to the organization once the original amount is repaid and/or real social impact has been demonstrated for multiple years.
As philanthropists and their advisors continue to think critically about combining the best business practices and philanthropic goals, philanthrovestments should take their place alongside the best ideas. And if philanthrovestments sound to you like the right combination of accountability and love for humanity, then give us a call at Excellence in Giving to start maximizing your philanthropic portfolio and making a verifiable difference.
Read more!
Saturday, February 27, 2010
Being Generous by Theodore Roosevelt Malloch: Paul Penley's Book Review
Theodore Roosevelt Malloch’s embrace of the generous life and its reciprocating benefits bleeds through every page of his new book Being Generous. He wrote this short book with one simple goal for its readers: “Discover what being generous means, and begin living it.” Although he proficiently educates us on the tangible value of developing a generous life, he comes up short on practical advice to “begin living it.”
Chapter One (“Generosity: A Universal Moral Urge”) cogently captures the universal religious appreciation for generosity. Whether called Tsedekah, caritas, zakat, dana, Patshatl, or philanthropy, Malloch ably demonstrates that being generous is “not just a core part of the human condition, but a universal moral urge, our defining nature.” (29)
In Chapter Two (“Charity and Gift”) he focuses on his personal religious heritage and explains how Christianity continues the heart of the Jewish Torah summed up in the Creator’s command to “love thy neighbor.” From his analysis of Jesus‘ parable of the Good Samaritan he concludes that “a neighbor is someone whom we encounter and whose need we observe and to which we have the opportunity to respond by giving....” (32) That Christian call to charity has grown louder and wider as “[t]he growing interconnectedness of people around the globe” exposes us to the pressing needs of so many people near and far “from other ethnic groups, other nations, and other religious faiths.” (32) Malloch’s conclusion: God has created us to give, and therefore commanded us to embrace that blueprint for our life.
Chapter Three (“Stewardship Spirituality”) in essence continues the argument of Chapter Two while focusing on the concepts of grace and gratitude. “Those who truly understand the meaning of grace ultimately have just one way to respond, and that is with gratitude.” (41) In a genius historical observation Malloch presents evidence that socialist states replacing the concept of gift with the concept of one’s “right” to all resources for a good life actually dehumanize their citizens and destroy their generosity. For example, Lenin eliminated private charities after the Bolshevik revolution, and the Communist party closed down all ten thousand volunteer societies in Hungary after two years of control. In Malloch’s words, “Remove gift and gratitude from human society, and what remains is not a community but a ‘lonely crowd’.” (43) The main point: erased awareness of undeserved gifts undermines the gratitude that drives generosity.
In making this point about gift, gratitude, and generosity Malloch falls victim to reductionistic logic. How? First, he labels every person’s time, talent, energy, influence, and resources as a gift that they should steward gratefully. Then, he concludes, “[I]f a transformation is to take place and if stewardship is to become a way of life--a kind of ‘life principle’ that touches every corner of life--it must begin with gratitude, with genuine thanksgiving to God for all his wonderful gifts.” (45) This assertion contradicts both scientific facts (see Chapter Six) and anecdotal examples used elsewhere in the book (e.g., Ted Turner). A person may choose to give not out of gratitude but in pursuit of the joy that comes from generosity. It may not be with thankfulness for what one has but with the goal of gaining a feeling and reputation that one does not yet have.
The strict connection between selfless stewardship and gratitude for gifts particularly breaks down when one considers that many resources and talents are the result of working diligently and sacrificially and not merely receiving a gift. It is hard to treat what one has earned as if it were a gift. Of course, here the pragmatic reader bumps into a theological claim that all things come from God whether you earned them or not, and there is no real argument to be had on matters of faith. However, the careful reader will find that Malloch has a difficult time consistently using that logic in his promotion of generosity and view of personal resources. For example, he attributes good generosity in Chapter Five to an “appreciation” for “earning it,” and again in Chapter Eight, “[I]n giving we help ourselves. In giving, we demonstrate that it is we who control our possessions, not vice versa. ...The more we advance in generosity the more we advance in happiness and in turn are motivated to increase the good fortune of others.” (102) there are many more motivations to give than gratitude for gifts.
Chapter Four (“Time, Treasure, and Talent”) provides a concise reminder that giving can and in its most fulfilling forms will involve our time and talent, not just our treasure. There is little argument to be had, and I might add, fresh insight to be gained from his basic reminder. Overall, I applaud his comments in Chapter Four on “risky” giving but question his reductionistic claim about the concept of “genuine” gifts. As for “risky” giving Malloch notes that our “risk-averse society” blockades great gifts and hinders our growth as human beings (58). If the risk of giving ourselves and our resources prevents bold giving, then it in fact frustrates our pursuit of the deepest human experiences and joys. Being a philanthropy advisor myself, I have seen clients confirm his conclusion when they recall that the greatest gift they ever gave involved financial risk. As for his comment on “genuine” giving, I believe he succumbed to unnecessary semantics: “In short it is only when we devote our time on earth to others that we make genuine gifts.” (56) To judge the “genuineness” of gifts by one’s internal devotion appears somewhat superfluous or tendentious. I don’t think the many Oxford graduates whose lives have been boosted by Oxford’s educational quality and reputation are concerned with the insincerity or genuineness of Dr. John Radcliffe’s significant benefaction at the end of a miserly life.
Chapter Five (“Economics and Morality”) presents a striking macroeconomic argument. The thesis is: Good economies go hand in hand with virtuous practices and people.
Malloch employs arguments from economists Herbert Gintis, Tibor Machan, and Adam Smith to make a solid case for low taxation, free market societies producing more generous people with more money to give. He asks a sensible question: Would not earners be better trusted giving their money to help others than the government would be? As he sees it, “[G]overnments are poor at generosity because they use other people’s money and have no appreciation for either earning it or stewarding it.” (70) Here I am persuaded by his logic and wholeheartedly agree that there is a difference between a person carefully spending hard earned money to benefit others and politicians spending citizens’ hard earned money to ensure re-election.
Chapter Six (“Generosity and Science”) presents scientific data that humans are hardwired for generosity. From Stephen Post’s psychological research to Martin Nowak’s evolutionary research, Malloch makes an adequate case that humanity is designed for being generous and benefiting from it (despite the fact the he missed or omitted other significant supportive studies that Nicholas Kristoff has reported in the New York Times).
Chapter Seven (“Responsible Generosity”) is the first chapter to finally address the question of how to execute one’s generosity rather than simply exploring the motivations behind it. His intention with the chapter is noble. “Responsible generosity consists of more than mere good intentions. It steers clear of careless strategies or ideologically motivated theories. It includes a willingness to follow through, to examine the results of the charitable giving. It takes full responsibility for the use of the donated resources.” (83) Although I applaud the written description of responsible generosity, he does not provide guidelines for giving, possible accountability structures, or practical steps to examining results. Instead he cities ad campaigns and books promoting giving and an internet site that lists giving opportunities with no clear vetting process mentioned for those projects and their results. Since I serve multiple family foundations with the purpose of strategizing and executing high-impact philanthropic portfolios, I find the chapter void of practical guidance on the matter of “responsible” generosity.
Chapter Eight (“Generous Society”) is a difficult chapter to describe. From a reader’s perspective, it represents the least organized and coherent collection of thoughts in the book. Whereas Chapters One, Five, and Six present thematically coherent arguments, Chapter Eight joins Chapter Seven and Ten in compiling somewhat disjointed thoughts not always plainly connected to the chapter title.
Chapter Nine (“Generosity and the Purpose of Life”) is a questionable venture in overestimating the book’s call to generosity. As he considers the question of life’s ultimate meaning, he concludes, “[T]he answer is giving. That is what life is all about. Living well has to do with the extent to which we live generously.” (106) It is one thing to demonstrate that generosity breeds joy and quite another to assert its practice as the totality of life itself. His claim seems to be a classic case of unwarranted extrapolation (poor argumentation) driven by noble zeal (honorable intent).
Chapter Ten (“Final Thoughts”) ends with some simple and practical advice for becoming generous. His thesis for becoming generous is that generosity is formed in a person; so it is best to start young. That’s good advice. As for how to practice generosity, he urges a whole life commitment and provides four one-sentence tips on good giving execution. His point can be summed up in some of his closing words. “To be generous, therefore, it is not sufficient to give money: you must also give time and energy--the time needed to follow things through and the energy needed to convey your gift into the hands of the ones whom you wish to help.” (123)
As a believer in the joy and meaningfulness of generosity, I commend his compilation of motivations for being generous. Although they are not always presented coherently in thematically linked and structurally sound arguments, there is enough substance to make any reader give serious consideration to his call to generosity. However, as a philanthropy advisor, I must acknowledge that his practical advice on how to “begin living it” leaves the reader wanting. In my experience good intentions are not enough in the discipline of giving. Those readers who will undoubtedly be inspired by Malloch’s call to generosity will need more specific steps for evaluating past giving, creating a philanthropic focus, using available resources to create and measure impact, leverage gifts and influence, and find joy in the celebration of proven results. Of course, my critique is driven by the fact that I spend each day of my life walking people through those practical steps. So maybe I am being a bit hard on him and could benefit from a more generous review of his finer points. Hopefully one day I will get a chance to talk these things though with him and experience the generous character that so deeply shines through his words.
Read more!
Chapter One (“Generosity: A Universal Moral Urge”) cogently captures the universal religious appreciation for generosity. Whether called Tsedekah, caritas, zakat, dana, Patshatl, or philanthropy, Malloch ably demonstrates that being generous is “not just a core part of the human condition, but a universal moral urge, our defining nature.” (29)
In Chapter Two (“Charity and Gift”) he focuses on his personal religious heritage and explains how Christianity continues the heart of the Jewish Torah summed up in the Creator’s command to “love thy neighbor.” From his analysis of Jesus‘ parable of the Good Samaritan he concludes that “a neighbor is someone whom we encounter and whose need we observe and to which we have the opportunity to respond by giving....” (32) That Christian call to charity has grown louder and wider as “[t]he growing interconnectedness of people around the globe” exposes us to the pressing needs of so many people near and far “from other ethnic groups, other nations, and other religious faiths.” (32) Malloch’s conclusion: God has created us to give, and therefore commanded us to embrace that blueprint for our life.
Chapter Three (“Stewardship Spirituality”) in essence continues the argument of Chapter Two while focusing on the concepts of grace and gratitude. “Those who truly understand the meaning of grace ultimately have just one way to respond, and that is with gratitude.” (41) In a genius historical observation Malloch presents evidence that socialist states replacing the concept of gift with the concept of one’s “right” to all resources for a good life actually dehumanize their citizens and destroy their generosity. For example, Lenin eliminated private charities after the Bolshevik revolution, and the Communist party closed down all ten thousand volunteer societies in Hungary after two years of control. In Malloch’s words, “Remove gift and gratitude from human society, and what remains is not a community but a ‘lonely crowd’.” (43) The main point: erased awareness of undeserved gifts undermines the gratitude that drives generosity.
In making this point about gift, gratitude, and generosity Malloch falls victim to reductionistic logic. How? First, he labels every person’s time, talent, energy, influence, and resources as a gift that they should steward gratefully. Then, he concludes, “[I]f a transformation is to take place and if stewardship is to become a way of life--a kind of ‘life principle’ that touches every corner of life--it must begin with gratitude, with genuine thanksgiving to God for all his wonderful gifts.” (45) This assertion contradicts both scientific facts (see Chapter Six) and anecdotal examples used elsewhere in the book (e.g., Ted Turner). A person may choose to give not out of gratitude but in pursuit of the joy that comes from generosity. It may not be with thankfulness for what one has but with the goal of gaining a feeling and reputation that one does not yet have.
The strict connection between selfless stewardship and gratitude for gifts particularly breaks down when one considers that many resources and talents are the result of working diligently and sacrificially and not merely receiving a gift. It is hard to treat what one has earned as if it were a gift. Of course, here the pragmatic reader bumps into a theological claim that all things come from God whether you earned them or not, and there is no real argument to be had on matters of faith. However, the careful reader will find that Malloch has a difficult time consistently using that logic in his promotion of generosity and view of personal resources. For example, he attributes good generosity in Chapter Five to an “appreciation” for “earning it,” and again in Chapter Eight, “[I]n giving we help ourselves. In giving, we demonstrate that it is we who control our possessions, not vice versa. ...The more we advance in generosity the more we advance in happiness and in turn are motivated to increase the good fortune of others.” (102) there are many more motivations to give than gratitude for gifts.
Chapter Four (“Time, Treasure, and Talent”) provides a concise reminder that giving can and in its most fulfilling forms will involve our time and talent, not just our treasure. There is little argument to be had, and I might add, fresh insight to be gained from his basic reminder. Overall, I applaud his comments in Chapter Four on “risky” giving but question his reductionistic claim about the concept of “genuine” gifts. As for “risky” giving Malloch notes that our “risk-averse society” blockades great gifts and hinders our growth as human beings (58). If the risk of giving ourselves and our resources prevents bold giving, then it in fact frustrates our pursuit of the deepest human experiences and joys. Being a philanthropy advisor myself, I have seen clients confirm his conclusion when they recall that the greatest gift they ever gave involved financial risk. As for his comment on “genuine” giving, I believe he succumbed to unnecessary semantics: “In short it is only when we devote our time on earth to others that we make genuine gifts.” (56) To judge the “genuineness” of gifts by one’s internal devotion appears somewhat superfluous or tendentious. I don’t think the many Oxford graduates whose lives have been boosted by Oxford’s educational quality and reputation are concerned with the insincerity or genuineness of Dr. John Radcliffe’s significant benefaction at the end of a miserly life.
Chapter Five (“Economics and Morality”) presents a striking macroeconomic argument. The thesis is: Good economies go hand in hand with virtuous practices and people.
Malloch employs arguments from economists Herbert Gintis, Tibor Machan, and Adam Smith to make a solid case for low taxation, free market societies producing more generous people with more money to give. He asks a sensible question: Would not earners be better trusted giving their money to help others than the government would be? As he sees it, “[G]overnments are poor at generosity because they use other people’s money and have no appreciation for either earning it or stewarding it.” (70) Here I am persuaded by his logic and wholeheartedly agree that there is a difference between a person carefully spending hard earned money to benefit others and politicians spending citizens’ hard earned money to ensure re-election.
Chapter Six (“Generosity and Science”) presents scientific data that humans are hardwired for generosity. From Stephen Post’s psychological research to Martin Nowak’s evolutionary research, Malloch makes an adequate case that humanity is designed for being generous and benefiting from it (despite the fact the he missed or omitted other significant supportive studies that Nicholas Kristoff has reported in the New York Times).
Chapter Seven (“Responsible Generosity”) is the first chapter to finally address the question of how to execute one’s generosity rather than simply exploring the motivations behind it. His intention with the chapter is noble. “Responsible generosity consists of more than mere good intentions. It steers clear of careless strategies or ideologically motivated theories. It includes a willingness to follow through, to examine the results of the charitable giving. It takes full responsibility for the use of the donated resources.” (83) Although I applaud the written description of responsible generosity, he does not provide guidelines for giving, possible accountability structures, or practical steps to examining results. Instead he cities ad campaigns and books promoting giving and an internet site that lists giving opportunities with no clear vetting process mentioned for those projects and their results. Since I serve multiple family foundations with the purpose of strategizing and executing high-impact philanthropic portfolios, I find the chapter void of practical guidance on the matter of “responsible” generosity.
Chapter Eight (“Generous Society”) is a difficult chapter to describe. From a reader’s perspective, it represents the least organized and coherent collection of thoughts in the book. Whereas Chapters One, Five, and Six present thematically coherent arguments, Chapter Eight joins Chapter Seven and Ten in compiling somewhat disjointed thoughts not always plainly connected to the chapter title.
Chapter Nine (“Generosity and the Purpose of Life”) is a questionable venture in overestimating the book’s call to generosity. As he considers the question of life’s ultimate meaning, he concludes, “[T]he answer is giving. That is what life is all about. Living well has to do with the extent to which we live generously.” (106) It is one thing to demonstrate that generosity breeds joy and quite another to assert its practice as the totality of life itself. His claim seems to be a classic case of unwarranted extrapolation (poor argumentation) driven by noble zeal (honorable intent).
Chapter Ten (“Final Thoughts”) ends with some simple and practical advice for becoming generous. His thesis for becoming generous is that generosity is formed in a person; so it is best to start young. That’s good advice. As for how to practice generosity, he urges a whole life commitment and provides four one-sentence tips on good giving execution. His point can be summed up in some of his closing words. “To be generous, therefore, it is not sufficient to give money: you must also give time and energy--the time needed to follow things through and the energy needed to convey your gift into the hands of the ones whom you wish to help.” (123)
As a believer in the joy and meaningfulness of generosity, I commend his compilation of motivations for being generous. Although they are not always presented coherently in thematically linked and structurally sound arguments, there is enough substance to make any reader give serious consideration to his call to generosity. However, as a philanthropy advisor, I must acknowledge that his practical advice on how to “begin living it” leaves the reader wanting. In my experience good intentions are not enough in the discipline of giving. Those readers who will undoubtedly be inspired by Malloch’s call to generosity will need more specific steps for evaluating past giving, creating a philanthropic focus, using available resources to create and measure impact, leverage gifts and influence, and find joy in the celebration of proven results. Of course, my critique is driven by the fact that I spend each day of my life walking people through those practical steps. So maybe I am being a bit hard on him and could benefit from a more generous review of his finer points. Hopefully one day I will get a chance to talk these things though with him and experience the generous character that so deeply shines through his words.
Read more!
Monday, January 18, 2010
Strategic Giving Opportunities for Haiti Relief Efforts
Many lessons have been learned from international disaster response and recovery efforts over the past 50 years. Excellence in Giving hopes to make giving recommendations with those lessons in mind. What are some of those lessons? Here is a short list:
Evaluation Criteria
The following giving recommendations are based on an organization’s:
5 Giving Recommendations
There are many more great organizations who are working in Haiti that do not meet all these requirements (e.g., Doctors without Borders, Partners in Health, Red Cross, Americares), but these 5 organizations stood out after evaluating a couple dozen that had created a Haiti Disaster Response fund and met most of the above criteria. Here are the giving recommendations and their rationale:
1. WORLD RELIEF
Rationale: The day after the earthquake WR’s country director Dr. Hubert Morquette was performing surgeries at King’s Hospital in PAP as WR staff began organizing themselves. Within 72 hours WR added relief experts to their 40-person Haiti staff, set up the first of many feeding centers, and shipped in clean water and additional supplies from the DR. World Relief has years of experience in disaster relief, an indigenous staff that has been living in Haiti, strategic partnerships (with MAP Intl, World Concern, HOPE Intl, Tearfund, Medical Teams Intl, etc.), and a stable functioning office inside Port au Prince to direct the relief efforts. They have been designated as the lead organization for this disaster on behalf of the Integral Alliance of relief organizations (www.integralalliance.org). Their work will maximize the compassionate outreach of Haitian churches, and they are committed to ongoing community development in Haiti in partnership with churches for years to come. Due to their partnerships with other organizations and community members, their initial funding needs are lower than other pure disaster response efforts, but they will continue to invest millions in ongoing relief and recovery efforts if funding is available.
2. SAMARITAN’S PURSE
Rationale: In 24 hours SP had their disaster response team on the ground to assess the situation and deliver an initial batch of relief supplies. Comparatively, they have been one of the most successful organizations at landing planes full of supplies at the overwhelmed and damaged airport in PAP (3 DC-6s by Friday, 2 C-130s on Saturday, etc.). They have delivered those supplies to the Baptist Mission Hospital and partnered with Food for the Hungry to distribute survival kits, tarps, and water purification kits in parts of the city. Although they do not have long-term development goals, their efficient transportation, strategic network, and quality staff on the ground (e.g., medical team leader Dr. David Gettle) makes them a strategic gift recipient during the initial weeks of the relief effort. They will spend $20-30 million on their efforts based on comparisons to the Tsunami and Katrina (where they are still working today).
3. CURE International
Rationale: The day after the earthquake CURE’s hospital in the Dominican Republic sent a 5-person team led by Dr. Scott Nelson into Port au Prince to add their surgical expertise to an emergency medical location. They have been performing surgeries nonstop and more medical workers and supplies are being sent each day. CURE’s greatest strengths will be utilized after the initial relief efforts that focus on triage when there is a transition to reconstructive surgery both at temporary medical facilities in PAP and at their hospital in Santo Domingo (DR gov’t has promised to bring in large numbers of casualties). For the long-term CURE hopes to raise millions of dollars to cover the cost of building or rebuilding a modern children’s hospital in PAP where they can continue serving Haitians for years to come. So donations will cover costs of doctors operating in PAP and the DR, medical supplies, and the eventual building of a permanent CURE hospital in PAP.
4. WATER MISSIONS International
Rationale: Two days after the earthquake Samaritan’s Purse had delivered 2 water purification mobile units to PAP. WMI has 10 more en route, 20 more should be ready by Tuesday, and they have orders for a total of 62 units from organizations like Samaritan’s Purse, Food for the Poor, and Convoy of Hope. WMI has engineered a unique water purification system that is mobile, solar-powered, and capable of purifying 2,000 liters of water every hour from diverse and dirty sources. When diesel is scarce, water is needed in large amounts, and money must be spent efficiently to provide it now and for coming months and years, WMI offers the best solution I know. WMI already had a presence in Haiti with country directors who are ready to train volunteers and NGO partners on the proper setup and operation of the water systems. On Saturday more WMI staff entered Haiti from the DR via ground transportation. After their initial relief efforts, all units will be used for long-term development programs in Haiti that include health and hygiene training. They estimate that one unit costs around $25,000 to build, transport, and train others in its proper use and in the health and hygiene curriculum.
5. MAP International
Rationale: Medical Assistance Programs Int’l is a provider of medical supplies (like the larger Americares) to many key relief organizations like World Relief, World Vision, International Medical Corp., etc. They had $2.7 million worth of medical supplies entering PAP 4 days after the earthquake and a total of $5 million scheduled. With the combination of donated pharmaceuticals from large medical corporations and cash donations, they will be able to keep a steady supply of medicines entering the country. Because of the large amount of pharmaceutical donations, they claim that $1 donated equals $75 in medical supplies provided. Since an organization like World Concern ran out of medical supplies to distribute from their PAP warehouse in one day, medical suppliers with experience in disaster relief and a solid network of partners are critical to support during the initial weeks of the relief efforts especially.
Confidence in Your Giving
The philanthropic advisory firm Excellence in Giving will be collecting reports on the quality of work and the effectiveness of each organization’s expenditures on Haiti relief. We have evaluated effective and ineffective funding in previous disasters and believe donations to these organizations will prove highly effective in relieving the suffering in the next couple weeks and rebuilding the country in the long-term. If you agree with the criteria we used to recommend these organizations above the rest, then you should have the confidence you need to give what you determine is appropriate and experience the joy of helping those whose story is breaking your heart.
Read more!
- Relief & Recovery: Smart donations go to organizations with quick disaster response (for the purpose of saving lives) and long-term recovery plans and experience (for the purpose of rebuilding lives).
- Overfunding & Underfunding: Organizations focused on the immediate disaster response tend to be overfunded (e.g., the Red Cross after 9/11) whereas recovery and reconstruction efforts are underfunded after the news stories stop.
- Cash & Commodities: Smart donations come in the form of cash and are better spent on commodities and services in the affected country to promote economic development in the process of relief and recovery.
- Foresighted Funding: Smart donations support recovery efforts focused on disaster preparedness and improved infrastructure.
- Culturally Informed Funding: Effective organizations to support have an existing knowledge of communities, cultural norms, and power dynamics that reduce unintended negative consequences.
Evaluation Criteria
The following giving recommendations are based on an organization’s:
- quality of staff on the ground in Haiti
- current and significant role in the immediate relief efforts of food, water, shelter, and medical services
- functional headquarters in/around Port au Prince
- a strong network of partners in the relief effort
- proven disaster response capabilities
- ability to transport supplies into Haiti efficiently
- commitment to long-term development after disaster response
- faith-based organization concerned about physical, social, and spiritual care
5 Giving Recommendations
There are many more great organizations who are working in Haiti that do not meet all these requirements (e.g., Doctors without Borders, Partners in Health, Red Cross, Americares), but these 5 organizations stood out after evaluating a couple dozen that had created a Haiti Disaster Response fund and met most of the above criteria. Here are the giving recommendations and their rationale:
1. WORLD RELIEF
Rationale: The day after the earthquake WR’s country director Dr. Hubert Morquette was performing surgeries at King’s Hospital in PAP as WR staff began organizing themselves. Within 72 hours WR added relief experts to their 40-person Haiti staff, set up the first of many feeding centers, and shipped in clean water and additional supplies from the DR. World Relief has years of experience in disaster relief, an indigenous staff that has been living in Haiti, strategic partnerships (with MAP Intl, World Concern, HOPE Intl, Tearfund, Medical Teams Intl, etc.), and a stable functioning office inside Port au Prince to direct the relief efforts. They have been designated as the lead organization for this disaster on behalf of the Integral Alliance of relief organizations (www.integralalliance.org). Their work will maximize the compassionate outreach of Haitian churches, and they are committed to ongoing community development in Haiti in partnership with churches for years to come. Due to their partnerships with other organizations and community members, their initial funding needs are lower than other pure disaster response efforts, but they will continue to invest millions in ongoing relief and recovery efforts if funding is available.
2. SAMARITAN’S PURSE
Rationale: In 24 hours SP had their disaster response team on the ground to assess the situation and deliver an initial batch of relief supplies. Comparatively, they have been one of the most successful organizations at landing planes full of supplies at the overwhelmed and damaged airport in PAP (3 DC-6s by Friday, 2 C-130s on Saturday, etc.). They have delivered those supplies to the Baptist Mission Hospital and partnered with Food for the Hungry to distribute survival kits, tarps, and water purification kits in parts of the city. Although they do not have long-term development goals, their efficient transportation, strategic network, and quality staff on the ground (e.g., medical team leader Dr. David Gettle) makes them a strategic gift recipient during the initial weeks of the relief effort. They will spend $20-30 million on their efforts based on comparisons to the Tsunami and Katrina (where they are still working today).
3. CURE International
Rationale: The day after the earthquake CURE’s hospital in the Dominican Republic sent a 5-person team led by Dr. Scott Nelson into Port au Prince to add their surgical expertise to an emergency medical location. They have been performing surgeries nonstop and more medical workers and supplies are being sent each day. CURE’s greatest strengths will be utilized after the initial relief efforts that focus on triage when there is a transition to reconstructive surgery both at temporary medical facilities in PAP and at their hospital in Santo Domingo (DR gov’t has promised to bring in large numbers of casualties). For the long-term CURE hopes to raise millions of dollars to cover the cost of building or rebuilding a modern children’s hospital in PAP where they can continue serving Haitians for years to come. So donations will cover costs of doctors operating in PAP and the DR, medical supplies, and the eventual building of a permanent CURE hospital in PAP.
4. WATER MISSIONS International
Rationale: Two days after the earthquake Samaritan’s Purse had delivered 2 water purification mobile units to PAP. WMI has 10 more en route, 20 more should be ready by Tuesday, and they have orders for a total of 62 units from organizations like Samaritan’s Purse, Food for the Poor, and Convoy of Hope. WMI has engineered a unique water purification system that is mobile, solar-powered, and capable of purifying 2,000 liters of water every hour from diverse and dirty sources. When diesel is scarce, water is needed in large amounts, and money must be spent efficiently to provide it now and for coming months and years, WMI offers the best solution I know. WMI already had a presence in Haiti with country directors who are ready to train volunteers and NGO partners on the proper setup and operation of the water systems. On Saturday more WMI staff entered Haiti from the DR via ground transportation. After their initial relief efforts, all units will be used for long-term development programs in Haiti that include health and hygiene training. They estimate that one unit costs around $25,000 to build, transport, and train others in its proper use and in the health and hygiene curriculum.
5. MAP International
Rationale: Medical Assistance Programs Int’l is a provider of medical supplies (like the larger Americares) to many key relief organizations like World Relief, World Vision, International Medical Corp., etc. They had $2.7 million worth of medical supplies entering PAP 4 days after the earthquake and a total of $5 million scheduled. With the combination of donated pharmaceuticals from large medical corporations and cash donations, they will be able to keep a steady supply of medicines entering the country. Because of the large amount of pharmaceutical donations, they claim that $1 donated equals $75 in medical supplies provided. Since an organization like World Concern ran out of medical supplies to distribute from their PAP warehouse in one day, medical suppliers with experience in disaster relief and a solid network of partners are critical to support during the initial weeks of the relief efforts especially.
Confidence in Your Giving
The philanthropic advisory firm Excellence in Giving will be collecting reports on the quality of work and the effectiveness of each organization’s expenditures on Haiti relief. We have evaluated effective and ineffective funding in previous disasters and believe donations to these organizations will prove highly effective in relieving the suffering in the next couple weeks and rebuilding the country in the long-term. If you agree with the criteria we used to recommend these organizations above the rest, then you should have the confidence you need to give what you determine is appropriate and experience the joy of helping those whose story is breaking your heart.
Read more!
Monday, January 4, 2010
Learning to Give . . . From Those To Whom You Have Given
Many of us still remember the rapid outburst of violence in Kenya at the beginning of 2008. Hundreds of thousands were displaced from their homes, and thousands confirmed dead and hospitalized. I want to tell you a brief story about a few Kenyans who were affected and the unlikely men that stepped in to fund the rebuilding of their lives. The story is reminiscent of the widow whom Jesus himself admired as she gave her last two coins (Luke 21:1-4).
The period of panic and unrest in Kenya forced many people to leave their homes in search of a safe place to hide. Specifically, 9 prison chaplains who work with a ministry our clients have supported ended up camping out at local police stations. It was the safest place in town until the government could restore order.
Of the 9 men, some had their homes burned, some had lost their furniture, and one had been hospitalized after being robbed. Peter Mosabi Kihingu who supervises the chaplains in Kenya had no resources to help these men rebuild their lives after the devastation. So he wrote to his partners in the U.S. home office asking for help. The home office itself had no financial reserves, but one Colorado chaplain had an idea to help.
He took the request for help to his church on Sunday. Now this was no ordinary church that you or I could attend. The church consists of prisoners that meet in a chapel behind many layers of barbed wire fence, video surveillance, and armed guards. In a room of convicted criminals, the chaplain read the letter and asked the men to help these Kenyan chaplains who have spent their lives helping inmates across the ocean. By the end of that one service, a small group of men who make about 60 cents per day gave $375 worth of Inmate Withdrawal Slips.
When Peter Mosabi Kihingu received the generous gift to distribute among the suffering chaplains, he wrote the following response: "I must say I am deeply overwhelmed by the donations to an extent that I really lack the words to express myself as to what this really means to me and to us here in Kenya. Being a former prisoner myself I really know what this means to them."
At Excellence in Giving, our passion is to advise clients how to give wisely. However, we must never forget the nobility of giving sacrificially. These prison inmates who gave much or all of their discretionary income present an example to emulate. Out of their poverty and magnanimity, they gave. They gave to help 9 suffering Kenyan chaplains because a chaplain had been giving to them.
This story is powerful. It is an inspiration to give boldly-to display the moral rectitude of transformed prisoners. And who knows... maybe your giving will create new communities of sacrificial givers like this prison church in Colorado. In my estimation, that would be both sacrificial and wise giving.
Read more!
The period of panic and unrest in Kenya forced many people to leave their homes in search of a safe place to hide. Specifically, 9 prison chaplains who work with a ministry our clients have supported ended up camping out at local police stations. It was the safest place in town until the government could restore order.
Of the 9 men, some had their homes burned, some had lost their furniture, and one had been hospitalized after being robbed. Peter Mosabi Kihingu who supervises the chaplains in Kenya had no resources to help these men rebuild their lives after the devastation. So he wrote to his partners in the U.S. home office asking for help. The home office itself had no financial reserves, but one Colorado chaplain had an idea to help.
He took the request for help to his church on Sunday. Now this was no ordinary church that you or I could attend. The church consists of prisoners that meet in a chapel behind many layers of barbed wire fence, video surveillance, and armed guards. In a room of convicted criminals, the chaplain read the letter and asked the men to help these Kenyan chaplains who have spent their lives helping inmates across the ocean. By the end of that one service, a small group of men who make about 60 cents per day gave $375 worth of Inmate Withdrawal Slips.
When Peter Mosabi Kihingu received the generous gift to distribute among the suffering chaplains, he wrote the following response: "I must say I am deeply overwhelmed by the donations to an extent that I really lack the words to express myself as to what this really means to me and to us here in Kenya. Being a former prisoner myself I really know what this means to them."
At Excellence in Giving, our passion is to advise clients how to give wisely. However, we must never forget the nobility of giving sacrificially. These prison inmates who gave much or all of their discretionary income present an example to emulate. Out of their poverty and magnanimity, they gave. They gave to help 9 suffering Kenyan chaplains because a chaplain had been giving to them.
This story is powerful. It is an inspiration to give boldly-to display the moral rectitude of transformed prisoners. And who knows... maybe your giving will create new communities of sacrificial givers like this prison church in Colorado. In my estimation, that would be both sacrificial and wise giving.
Read more!
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