Wednesday, November 25, 2009

Too Much or Too Little?

In a provocative working paper prepared for the Washington Legal Foundation, and discussed recently at the fall meeting of Giving USA Foundation my colleagues Suzanne Garment and Les Lenkowsky - scholars at the Center on Philanthropy at Indiana University - attempt to make the case that " ... [w]e are witnessing the most aggressive challenge in 80 years to the idea that the private sector is largely capable of running its affairs without government intervention" and that this applies specifically to the non-profit sector (as well as business and finance).

In particular Suzie and Les take on the National Committee for Responsive Philanthropy (NRCP) whose recent report Criteria for Philanthropy at its Best: Benchmarks to Assess and Enhance Grantmaker Impact says that "grant-making foundations, supported by federal and state tax subsidies - have generally proved inadequate or unwilling to meet the charitable obligations tax breaks are supposed to stimulate." Put another way foundation dollars are, NRCP asserts, "partially public dollars." But are they? Les and Suzie argue they are not and particularly assail the notion that foundations have failed to serve the needy, an idea that they say is not "easily" verifiable.

Citing other scholarly investigations Suzie and Les conclude that [the claim] "that foundations are not doing enough for the underserved should be greeted skeptically" and refute NCRP's argument that "generous tax subsidies ... make the government and the public partners with philanthropists" because this concept does not rest on historical or legal fact but is simply a political fig leaf. Their paper Public Philanthropy?: The Unpersuasive Case for More Government Control - the basis for a forthcoming book - is I believe a long shot in the national dialogue.

A few days following the Foundation meeting another colleague, and old friend, Pablo Eisenberg a scholar at Georgetown University (and founder of the Center for Community Change) opined in the Wall Street Journal. Pablo has exactly the opposite view and he takes on foundation and individual giving frontally: "Much of current philanthropic giving, by foundations and individuals, neither meets the needs of our charitable organizations nor addresses some of our most urgent public needs." Re foundations Pablo's arguments boil down to [1] getting foundations to increase their payouts (from the required 5% to a higher minimum) and [2] much greater accountability in partial justification for the tax subsidies they enjoy as a matter of public policy.

I have been thinking about this coincidental juxtaposition of opposite scholarly opinion for the past few weeks. In some personal ways I am a left wing libertarian; call it my savage side: I detest the role of government in purely private business, e.g. reproductive choice. And I am preternaturally anti-authoritarian (i.e. my wife says I'm an eight year old): In practice I rarely work professionally for a sub-division of government.

Like you I am living through, and been much affected by, the recession to which the government, in my view, has delivered too little too late. The nearly trillion dollars put out so far has dripped down slowly and benefited the least needy the most. To many economists, viz Paul Krugman of the Times, the feds have done about half of what will be ultimately needed.

In the end I am intrigued by the intellectual position set out by Suzie and Les. because it confronts and contravenes the conventional view. But in my opinion they're wrong at the working level. I agree with them, in theory, that we don't need more government control. But for me it's hard to escape the idea that in this day and in this hour we need more - not less - from government!

Tuesday, November 17, 2009

That Was Then ...

I was recently asked to write about my early years in this business. A few years ago I covered that topic in a speech. So I dusted off my remarks, did a bit of updating and sent this along. I hope you enjoy reading it as much as I enjoyed writing it.

On August 1st 1956, I went to work for Lee Tracy, executive director of the community chest in Paterson, New Jersey, the Sodom and Gomorrah of organized fund raising. About a dozen struggling charities hung by their deficits. Our campaign goal was $200,000. The in-the-office campaign slogan was "Help support a sagging chest!"

I hired on as public relations director, a title invented by Lee to elevate my self-esteem, and keep me working cheap. The salary was $75 a week, $10 more than I had been offered as a general assignment reporter for the Paterson Evening News.

Lee was a defrocked social worker, a serious daytime drinker, a poet, and sober or not, one of the two best people for whom I’ve ever worked the other Harold Oram, of course. Here is some of what happened to me during my first campaign:

  • The pastor of the Dutch Reformed Church of Prospect Heights kicked me out of his office when I told him the Bible didn’t mention the Dutch Reformed Church of Prospect Heights. I offered this observation only after he told me the Bible mentioned neither the community chest nor township campaigns.
  • Two large, round, tattooed gentlemen escorted me from a steel extrusion plant on the edge of town. I erred in believing that workplace solicitation for the community chest was a movement whose time had come.
  • The newspaper called Lee a drunk in print. Lee and I went to the bar of the Alexander Hamilton hotel where I wrote the denial.
  • We had report meetings. Over at the Alexander Hamilton hotel, volunteer solicitors gathered at breaking light. Following God’s blessings, watery scrambled eggs with little pieces of bacon floating in them, pastry of uncertain manufacture, and tepid coffee, these worthies told in tones of abject defeat the result of their failed entreaties to the merchants and counting houses of the city. It was a heady start on the day.

Lee had me write my first direct marketing piece, an earnest plea to the shoe stores, dry cleaners, butchers, hardware purveyors, barbers, pizza parlors, tarot readers, pool halls, bodegas, saloons and other tenders of Paterson’s commercial life. For inspiration, I repaired to the Tree Tavern, where warmed by wine and bloated by pasta, I wrote my heart out.

In the fullness of time, Alexander Hamilton left Paterson. Allen Ginsberg left Paterson. And so did I.

My next stop was nearly nine years at the Greater New York Fund, now United Way of Tristate, where I learned how to work effectively with CEOs of big companies, and how important good tradecraft was and is. I was well trained as a fundraiser, and mid-level manager. I was promoted twice, and I had a shot at a top job either in New York, or elsewhere within the United Way movement. I don’t see a lot of good tradecraft or training today ­ despite the proliferation of workshops, degrees, conferences, and what not. PowerPoint has dulled the senses, and almost no one can write a simple declarative sentence. The volunteers with whom I worked at the Fund were mostly terrific. As top executives in the city’s major firms, they were usually white, Protestant, and Republican. They were always hiring away my Fund colleagues, which was fine by me. I never bought the corporate rap. I played the part. I never truly believed in the script.

I remember one top solicitor from those years. This citizen was a partner at Morgan Stanley, and had pulled Fund duty because one of his clients had recruited him to the campaign. At the Fund, we used institutional leverage effectively, to raise volunteers and money. This guy had me to lunch at one of the restrictive downtown clubs and over his version of soul food told me utterly without irony that there were three important things in life: Morgan Stanley, the Episcopal Church, and the Republican Party. Certainly not the Greater New York Fund, a conservative place, sexist, ageist, racist, politely anti-Semitic in the manner of the time, homophobic, a simulacrum of the business community ­ which is exactly what it aspired to be.

In those days, I dressed for success, and I was quite a picture. The rule was to mimic the titans of trade: white button down shirts, dark pinstripes, rep four-in-hands, black wingtips, fedoras, and yes, by God garters to hold up the black socks! It was so perfect it was almost a send-up of the IBM look. The women wore dresses or skirts, and not those genderless dress-for-success-suits that came along later. A woman who showed up in pants would have been sent home. After she’d been fired.

The Fund was stultifying boring. My outside stimulation was graduate school, local Democratic politics, and involvement in many of the major social issues of the day, especially civil rights.

Every mid-level manager on the Fund’s campaign staff had to take a turn running one of two major luncheons a year. These huge, soporific affairs were held in the Grand Ballroom of the Waldorf Astoria. The carte de jour was the greasy, gray rubber chicken bred especially for the captive banquet trade, wrinkled little peas that tasted like grapeshot, and the spongy mystery cake covered with viscous red sauce.

There was little comic pause, but I was witlessly responsible for one memorable moment. We used a double dais to seat 60 volunteers, and in the backstage holding area, per the luncheon operations manual, I laid out 60 names on 60 chairs. As the band struck up "East Side, West Side," or whatever, I goosed the lead guy, and the grand entrance began. Unfortunately, I had reversed the seating chart backstage. The lower level dais was now the upper. Stage right was stage left! Toward certain confusion these merchant princes and plumed dukes of commerce advanced. Like a pack of squealing pigs on ice, they skittered from one end of the stage to the other, half the moguls climbing to the upper dais, half bumping their way down to the lower. Party time! … Clearly, I had absorbed all I could from this job. It was time to move on.


It was late 1963. I had just turned 30. My daughter, Janet, had only weeks before presented herself to the planet, and I had $100 in the bank. I answered a blind ad in the New York Times. Eve Bates, one of Oram’s vice presidents had run it. … What luck! I had heard a lot about the Oram firm, and the clients they served. I showed up at the appointed hour, all kitted out in the IBM rig, and was shortly conducted into the commanding presence of Harold Leonard Oram, HLO. He offered me an 11am cigar, a Dewars, (I accepted both), and after a nice bit of patter, sent me away, having asked for a writing sample.

A few days later, Harold telephoned to tell me he wanted me to "take a campaign" in Fulton, Missouri, at Westminster College, which had gained a moment of fame as the site of Churchill’s famed "Iron Curtain" speech. I had spent eight months at Fort Leonard Wood, generally described as the cloaca of military posts. No way was I going back to Missouri, or for that matter, any other landfill between New York and L.A. I turned him down. In those days, firms signed a campaign at 5 pm Friday, and needed a body with a pulse, on site, at 9 am Monday.

Three months later, HLO called back, and said he wanted me to work on a campaign for Hampton Institute (now University), then and now one of the nation’s preeminent historically black institutions, and the first of 14 HBCUs I have since served. Before I could spurn him again, he thundered, "There’s no money in Hampton. We’re going to run the campaign from here." And we did.

Harold Oram’s retinue of walking furniture included three VPs, all women, one of whom was African American, unusual for the time, and still pretty rare in the consulting business -- and the trailing edge of junior staff (including a second African-American) to which I had been seconded. Most other consulting firms either had no women on staff, or dunked them in the steno pool. No doubt about it: the Oram firm was really a different animal. We cherished a strong anti-corporate corporate culture, we were cause-driven, and we served liberal and left wing counter-cultural organizations.

Harold had come into this business as a publicist/fundraiser for the Lincoln Brigade, the American leftists, liberals, and idealists who fought on the anti-Franco side in the Spanish Civil War. It was the middle of the Great Depression, a time of one-cent candy, two-cent newspapers, and three-cent stamps. When I went to work for his company Harold had already carved out a brilliant career as advocate and money raiser for unpopular, often vanguard causes, and activists of every kind. Many of them couldn’t pay fees and we took them on anyway, hoping for the best. We often never collected and as sometimes happens friends became ingrates.

He gave free office space to any crony, cause, or luckless stray who asked for it. This habit of welcoming wildly different people of strong intellect and uncertain temperament led to many strong encounters in our clutch of airless Manhattan offices. Discordant personalities, invariably in need of unrestricted funds and unlimited photocopying, crossed paths with our small staff of equally eccentric and sometimes goofy people (two Mensa members out of a staff of maybe 20) whose common denominators were passion for causes and devotion to Harold. I fit right in. When I washed up on the Oram beach, I knew immediately this was where I belonged, I knew this was the work I wanted to do, and that is still true every day of every week.

We were a company (if you could call it that) of motivated, eclectic, multi-ethnic, noisy, opinionated, brainy men and women, vying for Harold’s time and attention. He was more loyal to us, and the retinue he towed, than any Tammany boss, and the flawed or fallen were like as not assigned to the compassionate payroll. Often ravaged by personal demons, they added zest and overhead.

Harold Oram’s world vision was coherent and purposeful. He was a political and social democrat, a one-worlder, and his true agenda was to make the globe a better place. That became my goal too – and still is. Clients were taken or turned away on that basis. Raising money was only a means.

He revered the written word and the compelling idea dramatically put. He expected felicity of expression in my and others’ writing. He was the best copywriter I ever knew. A compulsive editor, reviser and re-arranger, he rubbed copy raw until he got what he wanted. He was tough on the copy, but never on the writer. So naturally, I’d go back to my shared cubicle, broken desk and sprung typewriter, composing well into the night, hoping for his praise in the morning.

Each afternoon around five or six, anyone who was around gathered in Harold’s office for the best seminar on this business that anyone could possibly imagine. Clients, staff, jobseekers, and hangers-on drank his Dewar’s, and smoked what they brought. It was apt to be anything. Harold shared, smoked, chewed, and spat truly terrible Bock panatelas. And he held forth on clients, how we should serve them, how to approach their problem creatively, and he constantly exhorted us to think, think, think! At one such twilight collation, after a meeting with an impossible client, he resigned the account, and declared that "the pattern of client relations is ingratitude!" Often true, and I liked the ring of it. I prevailed on one of the failed academics we were then sheltering to render it in Latin. He came as close as he could to the vernacular and the framed rendition was right under HLO’s picture. It read "Patrono ingrates cliens semper cernitur," and it hung on my office wall until our devastating fire in 2007.

I moved up in the firm, and was given stock. Though I loved the madcap environment, I pushed us to become a business because I realized we could not survive otherwise. We went corporate in the 70s, as the staff grew. I caused the compassionate payroll to disappear, and gradually jettisoned the supernumeraries.

The client base broadened, and we moved to larger quarters. The quote "interior designer," another of Harold’s bi-polar rescues, managed to retain our look of impecuniosity and imminent demise. The late afternoons in Harold’s office became infrequent, and lacked the intimacy and bite of the late ‘60s. In 1978, I bought the business. The day after the contract of sale closed, Harold announced he was withdrawing his "working capital." That turned out to be $80,000, and it was a few days before I had to meet my first payroll. This was a lesson not previously imparted in the Dewar’s Seminars.

Though dependent on the success of the business for over half of his annual income, Harold did not hesitate to blow on the cards, then and thereafter. For many years after he retired, we had, at best, an ambivalent and mutually costly relationship. But in the last few years before he died on August 22, 1990, at the age of 83, I am glad to say we made it up.

I had bought the firm with the invaluable help of two demanding and eccentric outside investors whom I had come to know because we represented organizations in the peace movement, in social justice, civil rights, population issues, and the like. These guys were impact donors to all of them.

Stewart Mott, whose fortune came from General Motors, was brilliant, erratic, always true to his principles, and the family outcast. He was a libertarian marijuana grower -- in his Park Avenue penthouse -- devotee of Renaissance music, unpretentious but definitely odd. For example, he generally received any and all in his skivvies. When he wasn’t doing pot, he smoked an exotic brand of Egyptian tobacco that smelled like burning rubber and swamp gas, combined. Despite considerable wealth in the coinage of the time, and of course everybody was after it, Stewart was for a long time the Most-Eligible-Man-in-New-York-Never-to-Get-A-Second-Date-With-the – Same-Woman. His courting style was truly pathetic. But no matter. The ladies came in hope, and left in tears. Feminine raiment accessorized his bachelor lodgings. Stewart passed away in 2008, still a fervent believer in peace, family planning and all the other causes that had claimed his time, intellect and money.

Robert Wallace Gilmore was in personality totally different from Stewart, but equally off. He had some money of his own, and he had married into the Publishers Clearing House family. A Yalie, an ex-CIA man some said (I never found out), and Quaker do-gooder, he was a dreamer for peace and global justice. He and his wife Joyce established the Joyce Mertz-Gilmore Foundation. They both died years ago. … Alas. …They lived on West 11th, in Greenwich Village, across the street from the townhouse the Weathermen blew up.

Stewart and Robert backed me because they wanted to perpetuate the causes they helped so much. I remain devoted to the work they cared about even as I seek to serve a broader range of bill-paying, mainstream philanthropies.

Mott, Gilmore, their accountants, Harold Oram and I, constituted The Oram Group board of directors. One of the bean-counters was a sweet man who struggled with Stewart’s wilder riffs. The other was nice enough, but a hard-nosed guy, ever determined to save Robert from investing all his money in truly hopeless causes, into which category he had largely classified The Oram Group. For several years after he sold to me, Harold was Honorary Chairman of the Board. God. At one point he and I were suing each other over money. Robert was dreaming up an intergalactic peace movement, and Stewart went off on equally corky, incoherent ideas.

Board agendas were basically place mats. Our meetings were sometimes chaotic to say the least. That the company lost money in about as many quarters as we made it added a certain zest to our deliberations.

With Harold’s death, I was quite truly on my own. Working for Lee Tracy and the Greater New York Fund, I learned fund raising. Working for Harold, I gradually learned consulting, basically by making many -- and correcting some -- mistakes. Their gift to me was and is intellect, passion, and leadership: the ability to see things before others do, and to act accordingly. And I absorbed the simple truth of the old Romany proverb: "Sometimes you get the bear. Sometimes the bear gets you."

Thursday, October 15, 2009

Bailout? Bail Out The American People

"In light of the auto bailout, the bank bailout, the stimulus package,
the public option fight is a surrogate for how much government is
too much."
(New York Times, October 15, 2009)

Kenneth M. Duberstein
Chief of Staff/Reagan White House

If "the public option fight is a surrogate for how much government is too much," then for sure the fact that our country is literally falling apart must be a surrogate for how much government is too little.

The outcome of health care reform is still an unknown. Every special interest but one - the American people - has been able to put a big wet dog in this hunt. Michael Moore's shambling theatrics and bumbling delivery aside "Capitalism, A Love Story" nails the lobbyists' takeover of the Congress. Like you I have spent this last year watching the bailout at work, i.e., the privatization of corporate profit and the socialization of individual loss.

This film exacerbated my peasants-should-storm-the-castles feelings which is ridiculous for anyone my age. I should know better. But I don't. The professional world I inhabit is, and has long been, a mutually interdependent amalgam of private-public money. Private philanthropy - no matter how robust - cannot make up for the absence of government support, my rant for years. There is no better proof than the havoc the Great Recession has wrought upon US charities, especially human services, and reflected in the down-drift of contributions last year. (Giving USA 2009). I am slightly to moderately optimistic for 2010 if the market holds up. (Viz. Oct. 13th post).

Private industry - except when fertilized to the root by taxpayer money - will not deal with our tottering infrastructure, lagging public education, underfunded scientific research, support for the color green in all its manifestations, essential social services and yes, that past-its-sell-by-date piece of mackerel marked "health care reform." The American people are losing out. In just about any category of accomplishment in which we were once first we are now the trailing edge - except for advances in throwing out immigrants and making airport security even wackier than the Mad Hatter.

It is hardly a wonder that government and legislators, at every level, are despised by most of the American people; nor is it a surprise that almost 60% of the voting eligible would rather sleep in on election day or water the plants.

Time is running down for President Obama on health care. He never had the right. The left is mad but the left doesn't matter. The center? So far it all comes down to a Senate Republican from Maine. That's scary.

It makes me want to reach for my bucket. But not for bailing.

Wednesday, October 14, 2009

Is It A Turnaround Or Are We Just Running In Circles?

At this moment the Dow is up another 96 points (Wed. Oct. 14th, 11a EDT). The spectacular run-up in the stock market since the March low may or may not be a chimera. The high unemployment rate shows that all is not well in the economy and it is established fact that Wall Street is not really connected to the rest of the country. So what for next year? Six months or a year from now I'll look back at this post and see how well I did.

The huge grant-making foundations and university endowments lost money but are now making back much of that loss. They may not get back to their all-time highs anytime soon, or maybe never. But the question is if the market surge continues will grant-making and endowment income improve in 2010? If you are a nonprofit board member you should be asking your managements if they are budgeting for an improvement in the foundation line in 2010. Those on June 30 and September 30 fiscal years are already into the 2010 fiscal year and their boards (presumably) have approved budgets. Of course they can be amended - but should they? There are no signals coming from the foundation world to guide us that I have seen. They seem hunkered down, quietly amassing gains.

So here I go (again): if you are already a grantee I would ask/hope for a modest increase in funding - say 5-10%. If you're a new supplicant I think you'll find that most foundations have not opened the window. I doubt they will much before the late mid-last quarter of 2010.

Old line corporate philanthropy will not see much of a boost in 2010 but the trend to cause-related marketing will, I think, continue to widen and deepen with more and more charities trying to get in. One CRM firm I work with is running ahead even this year. By the way if you are familiar with the statistics Giving USA publishes annually keep in mind that they don't report on CRM because they haven't quite figured out how to get the data: what's charity (which is what GUSA measures); what's marketing?

That leaves individuals and family foundations. I think that as 2010 wears on we will see a very health boost in individual giving and we all know that - dead and alive - individual giving is about 80% of all giving as measured by GUSA.

In "Back To School," my September 9th post I advocated caution. I still do but a month later I have loosened the belt one notch.

I have been telling clients and professional colleagues all this year to plan for the turnaround. Is the turnaround here or are we just going in circles?

Monday, September 28, 2009

Hold That Crime Wave!

This morning's issue of the Chronicle of Philanthropy reports that "Nearly 30% of Nonprofit Leaders Took a Pay Cut This Year; Pay in 2008 Grew Quickly." NPR's Morning Edition picked up the story and played it this way: "It's one of those things that irks charitable givers no end - the high salaries paid to some nonprofit CEOs." The reportage went on to say that "the top pay at the nation's largest nonprofits rose again last year. ... But the survey also found signs that these high dollar salaries may be starting to turn around."

Ken Berger who heads rating agency Charity Navigator said that many donors go to the site, find out what a CEO's salary is "and vow never to support them again." He says this is the number one comment he gets.

Clearly there are horrendous salary abuses that make hot stories hotter and then there's the Chronicle's ridiculous and unsupported assertion that "The increases that nonprofit leaders received in 2008 are especially noteworthy considering the sharp drop in pay earned by for-profit executives." Huh? Why noteworthy? Among the 325 large charities surveyed nearly 100 leaders took a cut; half got raises; half pocketed smaller increases or saw their salaries drop.

In any organization setting the CEO's salary is a work of art. For me the test should be less about the CEO's salary (and perks) standing alone and more about his/her compensation in relation to the organization's total budget and the total responsibility assigned. Looked at that way I can make a pretty good case that even the highest paid CEOs in the kingdom of nonprofits are grossly underpaid! Take NYU - one of the institution's named. President John Sexton earned $1.3 million in 2008. Leaving aside the brilliance and verve he has brought to the job (non-quantifiable of course) the university's 2008 revenue budget was over $2 billion and it had assets on the balance sheet of nearly $6 billion. Even if you add in the perks like housing, car(s), entertainment allowance(s) etc. and goose his pay up to say $1.8-2.0 million I don't think he's near to being overpaid.

If you look at who's on his board of trustees there aren't many who don't have even sunnier paydays than Sexton for jobs of comparable scope and responsibility - plus the stock options (in some cases) that are of course not available in nonprofits. I'm sure Sexton will appreciate my plumping for a pay increase. But that's not my point. My sniff test is reasonableness. He passes.

At MOMA and at the Metropolitan Opera the Chronicle reports that directors Glenn D. Lowry and Peter Gelb respectively took pay cuts from their $2.1 million and $1 million+ salaries. Each man has brought innovation and excitement to his job - assets that don't show on the balance sheet of either institution. MOMA's assets exceed $1.6 billion and their revenues are about $150 million. The Met's assets (a few years ago - the latest available) were about half a billion and revenues about $140 million. These are huge numbers for arts organizations and few around the country come anywhere close. But I think given the responsibilities involved these guys are not overpaid. I believe their compensation is reasonable.

If you climb down the charity ladder you could apply the same is-it-reasonable test to any organization. I think you'd find most would pass, a few egregious abuses would be found, but for the most part, the men and women who run these organizations are - in my experience - less well compensated than their counterparts in the other world.

Years ago I was a stringer for the two dailies in Paterson NJ. Because I had a day job I spent more time at the morning paper because it went to bed late the evening before. One slow news night I was hanging about hoping to be asked to do something, anything. An older reporter told me to go over to police HQ and copy out the evening's entries from the booking blotter. There was a story the next day - under his byline - "Crime Wave Hits Paterson." Wow.

Friday, September 18, 2009

A Mighty Wheeze From Little ACORN Grows!

ACORN - (Association of Community Organizations for Reform Now) is the nation's largest community organization of low-and moderate-income families, working together for social justice and stronger communities. In other words they serve the poor through their advocacy and have been at it since 1970. Fuhgeddaboutit.

Some acorns fall further away from the tree than others. At ACORN as the NY Times recapped this morning "... some workers were videotaped offering advice to conservative activists who were posing as people interested in establishing a prostitution business," and allegedly those workers told them how to do it and how to evade taxes.

"Conservative activists" have long abhorred ACORN. They tried to make it an issue in the Obama campaign (nudge-nudge, Obama was a community organizer). Health care legislation, wars in Iraq and Afghanistan, nuk-el-er proliferation in Iran, financial legerdemain, pervasive conflicts of interest, ethical lapses, seedy sex and other hypocritical conduct is not keeping the Republicans (and alas some Democrats) - in both houses of Congress - busy enough. Industrious as they are ACORN is the dog days diversion. The House has voted to prohibit any federal funding of ACORN programs; the Senate is not far behind. This appears a largely symbolic act given that most of its revenues come from members' donations and other non-governmental sources.

The real issue here is not ACORN but the "war on poverty;" not that war, not Lyndon Johnson's famous coinage but the right's war on the poor. For as long as I can remember the image of the peasants storming the castles and seizing all that is ours has inflamed the imagination of the perfervid right. Ronald Reagan of blessed memory brought us the "Welfare Queen" tooling around in her Caddie as he and his cohort systematically disemboweled the Legal Services Corporation (largely succeeding in truncating its ability to defend poor people in civil litigation). The current hullabaloo over immigration is a first cousin to the war on the poor - viz Lou Dobbs a privileged big-mouth whose rantings goose ratings.

As a long time board member of PICO National Network ( a similar but smaller organization doing like work in 50 communities nationwide I have learned that despite their huge numbers (currently 13.2% of the nation's population according to the guv-mint) individual by individual the poor are invisible. But when they act collectively (a word inciting hydrophobia among the likes of Fox News, much of CNN, Hannity, Beck, Dobbs Savage et. al.) on matters like housing, safety, immigration, education, health care and anything else you can think of in which the haves crap on the have-nots they get results. In PICO's "actions," (similar to ACORN'S methods - except we take no government money) carefully organized presentations to legislators locally, statewide and nationally as well, produce results - especially at local levels.

The right wing hullabaloo and stacked "town meetings" railing against Obama's health care initiatives "you lie" (boy) - The Times Maureen Dowd really nailed it! - has at its institutional core racism, pure and simple.The organized war against health care reform and the war on the poor is the same war. Its battlefields are America's inner cities and essentially the people of color who live in them. Though there are millions of people of color in the rural US - African Americans, Hispanics and Native Americans - there are actually more poor whites. The whites out in the sticks and the hundreds of thousands of Native American poor on reservations - not benefiting from casinos and cigarettes - are even more invisible than the urban poor.

Congress's latest blather and diversion from the nation's business is not about ACORN. Think of cave dwellers blinded by the light.

Wednesday, September 9, 2009

Back to School

With the last quarter of the year on the near horizon it seems America's nonprofits are and have been struggling with endowments sliced nearly in half, deep cuts in government funds and giving in general off anywhere from 10-30%. Admittedly these data are impressionistic, reliant on trade gossip, press reports, direct experience and a tremulous gut. Some groups I know will come out technically ahead this year because they budgeted conservatively in January - reducing projections substantially from previous highs. Others with cock-eyed fiscal years, poor forecasting or both are showing significant losses in two calendar years running.

Though I can't prove it I truly believe it will get at least a bit worse before it gets better. In past recessions what I saw was philanthropy as a lagging indicator - meaning it plopped after the rest of the economy and a leading indicator in the recovery - coming out of the swoon sooner. If I'm right for 2010 charities will have to be even more diligent in setting expectations and in assuring fiscal prudence. If I'm wrong they will not be hurt by being careful.

A few thoughts:
  • During the troubles we have heard people urge like nonprofits to merge to save money. Horse pucky. Nonprofits have trouble merging in the best of times when both parties bring strong balance sheets and profit and loss statements to the table. In these times one party is likely to be much weaker than the other and the acquiring organization may be taking on trouble. Ergo: if you're hurting look at a possible merger. But more realistically get your boards to concentrate on rebuilding the balance sheet and improving the P. and L. from the inside out. The frog won't turn into a prince. Better to plan for the princess turning into a frog.
  • When you buy a new car you get a better deal by bargaining up from the dealer's true cost rather than haggling down from his posted list price. That's how I think you should be looking at your organization. Assume the government money is not coming back any time soon. Individual and family foundation donors - contrary to Madoff and other exaggerations - have been less hurt by the recession than foundations and corporations. But many have been hurt. Plan for a modest comeback for individual giving in 2010.
  • Grant-making foundations are asset driven. The so-called market recovery has not yet come close to attaining previous highs. That means foundation assets haven't either. Multi-year grants are unlikely and if you're not already on their books the odds lengthen.
  • With corporations it will continue to be pick and play. Big banks, investment houses, oil and many entertainment companies are doing well. Retail and big box are mixed; communications, food, real estate are mostly sucking wind.
  • Until employment rebounds the economy will not fully recover. No one I read is forecasting a quick recovery.
In a word caution for 2010. Stick to the basics. Don't forget your galoshes.

Tuesday, August 11, 2009

Women as Confident Askers

A just-published study by Scott Taylor, an assistant professor at the University of New Mexico, shows that women tend to underrate themselves substantially (11%), while men tend to overrate themselves slightly when asked how they think their bosses would rate them. Furthermore, the older the woman, the more she may underrate herself. I wonder if the findings might carry over to the level of confidence that women feel going into a solicitation. Is a woman a bit more likely to underestimate the effectiveness of her presentation in a face-to-face encounter? or less likely to speak up at a board meeting on behalf of her point of view? It's worth a little introspection.

I recall a formative moment early in my development career, perhaps a rash moment, in which I attemped to emulate the way I thought a man might handle a situation. I was visiting the head of PG&E in San Francisco with my boss Frank Oppenheimer, the Director of the Exploratorium. Our goal was a program grant for $5,000 - a good sum from PG&E in those days. The CEO and Frank made pleasantries. The CEO was an admirer. Frank referenced a new book the museum had just published entitled "Looking at the Light," a copy of which was in my hands. The CEO said he'd like to see it. Something came over me, and I tossed it on the table toward him saying lightly, "Sure, but it'll cost you $5,000." The CEO laughed, thumbed through the book, and gave us $5,000.

That moment set me up for the rest of my career. And yet, it did not instantly create a new, confident core. I was a girl from the beforetime, afterall. While I could act with confidence, I was ginning it up. Well, that's good, and practice matters, but what this new study reveals is that there is still more to gain. AP reporter Heather Clark writes, "The exercise was a confidence booster, Walker said. Now, she takes five minutes during weekly meetings with her supervisor to discuss what she's done on the job, something she thinks men do more easily than women."

Stepping out with more confidence that others may regard us even better than we regard ourselves may even lead to better health. Who knows?

Monday, August 10, 2009

Affirmative Action

A major donor to his alma mater showed up for a football game and as he entered the arena asked the usher where the 50 yard line was. The reply was "sir wherever you wish."

It seems the board and top leadership of the University of Illinois are all for affirmative action. They kept a private list of "connected" individuals to whose children, other relatives or friends admissions preference would be given. I am not rushing to judgment here because I really don't have anything except what I read. But this business of preference comes up all the time in every type of charity. Human character being what it is there is no doubt that the wink-and-a-nod approach to admissions, orchestra seats, elite health care, or for that matter the "right" restaurant table is a clear and present danger.

Development officers rattle on about how building "relationships" with donors is the essence of their work. The donors would more likely call it "connections." Indeed there is absolutely nothing egalitarian about philanthropy and moreover people slip off the ethical cliff all the time. There are major tertiary health care centers with special telephone numbers for key donors; there are theater companies with green rooms for "patrons;" CEOs swig tea with LOLs (no, not laugh-out-loud); "call-me-anytime" privileges attach to those whose importance is digitally enhanced.

A former Oram colleague became development officer at a symphony orchestra in a deep south city whose season opened in early September when even at 7p the temperature was still in triple digits. The women liked to wear their furs on opening night. Forget tote bags, coffee mugs and all the other tchotske "premiums" of the fund raising trade. His best gift to major donors was letting them park their Bentleys in immediate proximity to the front steps of the auditorium. Or as Marilyn Shapiro former major gifts at the Metropolitan Opera put it to me one time: "the ones who give the most get the most!"

I'm for affirmative action. Aren't you?

Tuesday, July 21, 2009

Home Delivery

"Authorities in Cambridge, Mass., announced today that prosecutors there would not pursue disorderly- conduct charges brought against the prominent black-studies scholar Henry Louis Gates Jr. last week after he exchanged words with police officers investigating a falsely reported burglary at his home."

-- Chronicle of Higher Education, 17 July

The New York Times plain out missed this story initially burying it back in the main news section. Eight days later it is page one of the Times and on all the talk shows. The story is still developing. But there is little chance that when a white police officer a sergeant no less sees two black men (Harvard Professor Gates and his cab driver) trying to unjam the stuck front door of Gates' house in an ivied Cambridge neighborhood there wasn't a quick judgment based on ingrained institutionalized racism.

The sergeant's immediate presumption - when another Harvard employed (and presumably white) neighbor called 911 - was two black men breaking into a house in a white neighborhood. Reverse the negative: two white men are "breaking" into a house in a black neighborhood. A 911 call is made and a black police sergeant arrives on the scene. How would s/he respond? Professor Gates and the cab driver who was helping Gates open his front door are lucky they weren't shot dead.

So how much difference is there - really - between attitudes toward race between the Cambridge cop and the august Times? Or between the cop's actions and how the rest of us whites think? Race based thinking is ingrained pervasive and unwitting much of the time. But there it is.


In her Senate testimony last week "a wise Latina judge" was grilled about her role as a board member of Puerto Rican Legal Defense Fund (PRLDF). The senators were trying to tie Judge Sotomayor to various PRLDF legal actions and advocacy of which they disapproved.

The judge responded with a brief disquisition on the role of board members at PRLDF and other similar public interest organizations like Mexican American Legal Defense Fund (MALDEF) and NAACP Legal Defense Fund (LDF). She said that if the senators reviewed the record of board meetings they'd find that most of the meetings were devoted to fund raising and that board members were expected to raise money not to decide the legal docket.

Having at various times over the decades worked for each of the three I can aver that her statement is true. And universally true. The trustees of nonprofits are legally responsible for conserving the assets of the groups they serve and among other things that devolves to assuring the organization budget is met. If to do so fund raising is required - as it is in most - that is indeed the board's role.

The Republican senators had no discernible interest in that. But I think it is useful to remind trustees of their basic responsibilities. I spend a lot of my time doing it - both as a consultant and as a board member of three nonprofits.

For the most part the board members I know take their responsibilities seriously as counselors and overseers holding their managements accountable. But like walking upright raising money doesn't come naturally. Most trustees are willing enough to give (if asked) but few are willing to ask and duck that part if they can consciously or not.

None of this has anything to do with Judge Sotomayor's qualifications for a Supreme Court seat of course. But this snippet of testimony was an otherwise light moment (for me) in a lethally tedious passion play.

Monday, July 6, 2009

Take the Millions and Run

Recent valuations of nonprofit and foundation endowment funds have come out and it is not a pretty sight. "The five largest single-university endowments - Harvard, Yale, Stanford, Princeton, and the Massachusetts Institute of Technology - expect to finish the year with 25- to 30-percent losses," reported the Wall Street Journal. Also unlovely is the lack of focus on the much-vaunted money managers whose compensation for the last few years was tied to driving the bubble. Let’s watch for their signature gifts back to the funds they managed, shall we? No one else is.

And everything was going so well! Our poster child was Harvard University. "The Harvard endowment soared from $4.8 billion in 1990 to $36.9 billion as of June 30, 2008, and in the last half-decade or so, the men and women who run Harvard seemed to have convinced themselves that the university's fund would grow at double-digit rates for, well, eternity," writes Vanity Fair.

Just two short years ago, was singing paeans to Harvard University's endowment fund CEO Mohamed El-Erian. He had rescued HMC (Harvard Management Corporation) from the gaping hole left in 2005 by the departure of Jack Meyer and nearly three dozen staff, and ballooned the fund to $34.9 billion when he suddenly resigned and returned to PIMCO. "El-Erian's return last year (23 percent) beat Harvard's five-year average of 18.4 percent and the 12.3 percent average over the same period for endowments and foundations with more than $1 billion in assets, according to Wilshire Associates," effused "We will miss his leadership," lamented James F. Rothenberg, treasurer of Harvard University and chairman of the fund's board; "In 18 short months, HMC has completed the transition and rebuilding phase and established conditions for sustaining superior returns over time."

Cut to June 23, 2009 in Bloomberg: "Harvard University, the richest and oldest U.S. institution of higher education, will cut about 275 staff positions in response to its endowment's sinking value… Harvard President Drew Faust has tightened spending controls, frozen salaries and offered employees early retirement as the school estimates its endowment will fall 30 percent for the fiscal year that ends this month."

Previously, President, Drew Gilpin Faust, had issued an open letter on Feb. 18 declaring that the school was "facing the worst economic crisis since the Great Depression."

Vanity Fair's Nina Munk asked a hedge fund manager "who counts Harvard among his investors…to look at Harvard's finances now and assess the extent to which its endowment will be able to keep pace with its immovable costs. The hedge fund manager's conclusion: "They are completely fucked."

My financial advisor, Martin Weil (a former arts executive director), who had tried several times to explain to me over the last few years why university endowment funds were earning vastly more than our puny savings could generate, writes: "I find the story of El-Erian, who left PIMCO in 2006 to take over the reins of HMC, abruptly returning to PIMCO without any comment whatsoever in 2007, to be one of the most under-discussed stories in all of this."

While at Harvard, El-Erian and his number two person made $6.5 million and $6 million very quickly. Then El-Erian was suddenly gone. Is no one protesting? Are millions per year not related to billions lost?

Why is it so hard to hang on to ancient lessons? Hand over your money to someone to "invest" and give them the incentive of a dizzyingly high reward to the extent that they out-do the market, and they'll probably gamble with it (or worse, as we've seen). As we all know, the only consistent winner in a gambling establishment is the House.


Thursday, June 25, 2009


Stephanie Strom, the New York Times' philanthropy reporter today quoted a study by the National Commission for Responsive Philanthropy the sum of which is that among a majority of foundations caught in the Madoff debacle those with smaller boards were more likely to lose money. Or put another way more of us are smarter than just a few of us.

In fact I read a study (which naturally I can't find right now) that concludes decisions made by a group may be more on target than decisions made by just one or a few people. (If you know the study I'm thinking of please let me know).

Board size and diversity matter for more than just making or losing money. The real challenge of governance is to strike a balance between the benefits conferred by a diverse board versus the risk of a board so large effective governance is impossible. Many charities develop big boards out of hope over caution - that the larger the board the more potential givers there are. This is almost never true in my experience. The results are first the gifts don't materialize and second a small executive committee winds up running the organization making for a two class board roster of greater and lesser beings. When that happens the diversity evaporates and the risk of dumbing down decision making is just as great as with the small board.

I haven't yet seen the NCRP study Strom quotes but I am more than familiar with a few of the foundations included in the study. The real problem is less size than cronyism. Small charity boards of every sort are more often stocked with intellectually arthritic founders, friends of the founders and family members or others who tend not to sass the alpha personality. In my view a board of five to seven people - provided they are truly independent - can govern effectively.

Size counts. But a willingness to break wind at the picnic counts for more.

Tuesday, June 9, 2009

Charity "Handle" $307.65 Billion in 2008

Donations to charitable causes
in the United States
$307.65 billion in 2008.

The sky is not falling. Henny Penny can go back to picking up corn."
Del Martin, Chair Giving USA Foundation

Though 2008's estimate of giving posted an inflation-adjusted 5.7% decline from 2007's $314 billion this is a very good number in the sense that the rope broke on the drop through the gallows. As I blogged last week " ... The free fall and economic collapse didn't hit big until the last quarter of 2008. So the data for 2008 will not reflect the full damage; 2009 will." 2008 is the first decline in giving in current dollars since 1987 and only the second since Giving USA began publishing annual reports in 1956. The full report on philanthropy was released today for the 54th year by Giving USA Foundation [TM] and can be purchased on-line at

As always individuals gave the most money (75% from the living and 8% from the actuarially matured); foundations came in at 13% and corporations, 5%. Bequest giving may be higher than shown because it only includes estates large enough to exceed the estate tax exemption. Also I think corporate giving is under-reported because it has no way to measure cause related marketing or gifts-in-kind, both increasing sources of company donations.

On the where-it-goes side religion as always is a plurality - in 2008 35%; education 13%; gifts to grant-making foundations 11%. The remaining 41% of contributions - all in single digits - went to arts, environment, health, human services, social betterment and international affairs.

I'm just showing a little garter here. The full report is very much worth reading.

"Go back to basics. Tell your story honestly and positively."
Nancy Raybin, Chair Giving Institute

Thursday, June 4, 2009

Rooney Appointed: White Smoke Rises

Patrick Rooney has been named head of the Center on Philanthropy at Indiana University. With colleague Melissa Brown and Center staff Giving USA - the most complete compendium on giving in the US - is coopered together each year and as everyone in the field knows it is the resource. Nothing else comes close.

Giving USA Foundation is the publisher and sales arm but the research and writing is done in Indianapolis. The announcement said after a "nationwide search" Patrick was named. I was not surprised but when Patrick and I had breakfast in New York a few months ago he assured me he was not a shoo-in. This I did not believe.

Patrick is of course an economist but he does not speak in tongues and he is definitely not morose - two hallmarks of the discipline. Not only does he explain abstract stuff in an interesting way he is cool to be with unlike say Ben Bernanke. Can you imagine?

Patrick's anointment and the attendant white smoke from Indiana comes just a few weeks before the 2009 edition of Giving USA will appear, no accident of timing I'm sure. As I'm no longer Foundation chair I don't get a sneak peak at the data and I haven't a clue. But that there will be a decline in absolute inflation-adjusted dollars in the total giving handle seems foregone. Duh. So Patrick will have plenty of media attention as he labors to turn crap into ice cream. That should keep him busy for awhile.

Next year's Giving USA might show even more horrendous data. The free fall and economic collapse didn't hit big until the last quarter of 2008. So the data for 2008 will not reflect the full damage; 2009's data will. But what might otherwise ameliorate that bad news is that since the end of March a powerful market rally and other budding signs of recovery - more new housing starts, stabilizing retail sales and a decreasing rate of increase in unemployment rates - are key markers. It does seem that the last quarter of 08 and the first quarter of 09 marked the slough of our despond. ("Powerful rally" means I am again opening my investment statements without a standby ventilator).

So Patrick:

Harper's Index for May reported almost $12 trillion of value has been lost so far by American individuals and families in this meltdown. Isn't that almost as much as the so-called intergenerational "wealth transfer"of which we heard so much during the bull markets? I always wondered if that was just lipstick on a pig because I never understood the assumptions. Is it time to re-calculate or just "fugeddaaboutit?" Okay the wealth was transferred. When I asked another social scientist about it a few months ago he said the model didn't consider the greed factor.

But fund raisers do.

Friday, May 22, 2009


In the one Ponzi fraud I've known about first hand and in all the others I've only read about the perps were never interested in enriching anyone but themselves. The curious thing about Madoff is that real charities got real money - some over many years. An as yet undetermined number of billions may have been stolen but at the same time charities scored in the hundreds of millions - some over many years. This puts the blessed use of tainted money in a whole new light.

The court appointed trustee charged with clawing back as much as he can for redistribution to the rightful claimants is flinging lawsuits around and now it is possible the feds will step in with both civil and criminal complaints. Oy! Everyone assumes a lot, if not most, of the pilfered pelf will never be recovered. Theoretically at least the charities who were the recipients of stolen money may have some exposure even if they had no way of knowing it. Most of them have probably spent whatever they got from the Picowers, J. Ezra Merkin, David Levy, Stanley Chais, et al.

Nonetheless many charities (including a few of my clients) unwittingly received and spent stolen money to perpetuate their noble cause - and the people and organizations that benefited might not have been served without that money. And unlikely as it might be suppose a charity knew how some money they got came to be and went ahead and used it anyway on the principle that there is a greater good. That couldn't happen. People just don't behave that way. Do they?

Thursday, May 14, 2009

Money and Sausage

The old joke about sausage is you don't want to know how it's made. The same applies to fortunes. Best not to how they were made.

When the Picower Foundation collapsed the day after Bernard Madoff's arrest. I felt really terrible. Through a client I had met Barbara Picower a few times. I found her intelligent, savvy and truly dedicated to dispensing the Foundation's money with wisdom and compassion. On my recommendation she hired one of my 2007 grad students. This particular client was hit with a seven-figure loss now and the loss of future gifts as well; and others with whom I am or were involved got hit too.

How could a billion dollars just go poof and the nez plus ultra Foundation offices on the 39th floor of 9 West 57th Street be shuttered overnight? I found this passing strange. Then earlier this week attorney Irving Picard the court-appointed trustee responsible for hunting down Madoff's assets so they could be returned to the investors Madoff screwed brought a "claw back" action against the Picowers, charging them personally with being "complicit in [Madoff's] fraudulent activity." As the Wall Street Journal reported, Picard said the Picowers had to know it was impossible for 14 funds they had invested with Madiff could each have returns of over 100% a year.

He is seeking the return of several billion dollars from the Picowers. How much was distributed by the Foundation we don't know yet. But we do know real charities got real money over time. How much will be clawed back is anyone's guess. Mine is not much. Word on the street is that Picard is bringing a second claw back suit against another major philanthropist - in the same Palm Beach social network as the Madoffs and the Picowers. I'll write about that one too but not until the law suit is brought (if it is) and the name is public.

The Picowers' high profile lawyer is William Zabel, former chairman of Human Rights First, trustee of amFAR and secretary of - oops - the JEHT Foundation which also crashed the day after the Madoff arrest. Mr. Zabel said the Picowers were "victims" and not "complicit." As in Casablanca when Captain Renault (Claude Rains) says to night club owner Rick Blaine (Humphrey Bogart) " I'm shocked, shocked to find that gambling is going on in here!"?

So if Picard is right and prevails we will know how the Picower fortune was - if not made - certainly enlarged. The current trial of Anthony Marshall charged with bilking the estate of his allegedly demented mother Mrs. Vincent Astor is interesting counterpoint. Forebear John Jacob Astor was not a paragon of probity. When you look at old fortunes you can conclude that it takes about three generations to bleach out the stains. By then nobody cares about how the money was made - only where it's going.

But sausage is of the moment. Pass the mustard and sauerkraut please.

Monday, May 11, 2009


Today's Wall Street Journal reports search firm Spencer Stuart has been engaged to hunt up new board members. GM is now owned by three entities two of which are in a category of nonprofit organizations: the US government and the UAW. As we say in New York I "know from" nonprofits and I know about governance as well.

By losing staggering amounts of money and being nonprofitable for several quarters one might propose that GM is a nonprofit though it didn't plan to be. GM resembles all too many nonprofits in three important ways:
  • It now states its budget in terms of its deficit.
  • Its board fits the dictionary definition:" ... a board is a long thin wooden object."
  • Management has been inept.
So Spencer Stuart why not me? I'm a turnaround kind of guy.

I know nothing about cars north of the steering column. But: as an adjunct faculty member at the Milano management unit of New School University we and the part-timers at NYU were unionized by the UAW a couple of years ago. But Ron Gettelfinger I won't be in your pocket.

And I pay taxes; that makes me an owner!

Finally there is really nothing inherently different about the roles and responsibility of a business board of directors vs. a charity board of trustees.
  • Stewardship of assets.
  • Oversight of management.
  • Accountability.
  • Transparency.
  • Commitment to stakeholders.
I promise to give up my Toyota Rav 4 which I love and which Consumer Reports lists among the top five cars sold in the US. But not until GM turns out a car that's better or at least equal.

Also I promise to fly coach and use my own miles to upgrade to business.

So give me a call. I'd be happy to come in for an interview. Do I have to wear a tie?