Tuesday, June 17, 2014

Two And A Half Cheers!

Giving USA Foundation today reported that American individuals, estates, corporations, and foundations donated an estimated $335.17 billion to charitable causes in 2013, an increase of 4.4 percent (3.0 percent, adjusted for inflation) from the revised estimate of $320.97 billion for 2012.

Each year Giving USA Foundation (www.givinginstitute.org) publishes a detailed compendium on the previous year's charitable giving. The research and development is carried  out by the Center on Philanthropy at Indiana University, a long enduring relationship between the two groups. The Giving Institute, an alliance of 36 fundraising consulting firms, owns the name but  on its own GI lacks the staff and resources to compile and report the data.

Though charitable giving is still not at the pre-recession level achieved in 2007 ($349.50 billion, inflation-adjusted) positive news is great. But we all live and work in a world of immediacy. For years I have been stewing about the six-month reporting lag. To me this a major downside of a very expensive undertaking. Frankly,the earth does not move on this news. For national media it's a one or two day story. For me there is little of actionable value for a given client.

What matters most is the sources of giving (below) and those proportionate data have been constant since 1956 when we started tracking it. In fact the money given hovers around plus or  minus 2% of GDP. The needle hasn't  moved. Also the research does not report cause related marketing, a huge amorphous chunk of corporate "giving." Nor does it examine the remittance economy which to me is as much philanthropically motivated as foundation grants; and it under-reports estate giving because most estates are below the taxable line for which returns must be filed federally. (The states are another matter. Don't ask). 

The first few pages of the Giving USA report attract the most media attention and are of the most value. But the recondite details are of very limited interest or practical use. So for whom does the data matter? The Giving Institute is spending some three hundred thousand dollars a year for the benefit of a relatively small cohort of academics and maybe the Gnomes of Zurich. The R&D that goes into Giving USA does yield those summary pages. But how much longer can GI sustain this magnitude of expense? This question has been knocking around for years and the desultory discussions the members have had go nowhere. At bottom, we are a very small trade association in search of high purpose

The Institute doesn't or can't bring in new members fast enough at any dues level to offset the huge cost.In  my over-a-glass chats with top notch outside firms who are not members but are every bit as good as we self anointed "thought leaders" are the response is always the same:it's just not worth the money. No value add. Nor is the Foundation's philanthropy effort, though vigorous, sufficiently robust because try as we might we don't attract much in the way of outside donors.

Advertising revenue has not eventuated because we don't have enough base to justify the cost to a serious  buyer. Fidelity (which  just once gave us  money), Vanguard and Schwab would have been and may still be the best prospects - but we have to show real value given that they have their own marketing  platforms.

Indiana University is and has been a great partner for whom I have the highest regard. But frankly they are swimming  in money; do they really need ours? Why couldn't we license the Giving USA name to them for a big royalty payment? 

Our company continues its membership because we recognize an obligation to give back - and we truly enjoy the company of other firms' principals. We have never rationalized  our participation economically. If we did we'd be gone.


Monday, June 2, 2014

The Giving Institute's Summer Symposium

On June 17th  Giving USA Foundation will release numbers on philanthropy for 2013 and I'll post my comments then. A number of consulting firms  like The Oram Group belong to the Giving Institute whose mission is the advancement of ethical philanthropy. We first joined  in 1955, dropped  out in 1975 and rejoined  in 1992. (The Institute members were still discussing the same issues in 1992 as they were when we resigned because Harold Oram got  into a toe-to-toe with the late George Brakeley - over nothing.  Money. But I stray).

In late July Giving Institute will hold its annual "summer symposium" in Vancouver BC. (Good duty; great city). In addition to the aforementioned comments to come on Giving USA I have a few other issues for the graybeards (including me) to think about:


Paul Schervish of Boston College and his colleague John Havens have been studying and reporting  on the intergenerational wealth transfer for years. But a funny thing happened to the Rapture on the way. The economy tanked and we heard  little of the wealth transfer for several years. Now the wealth transfer is back - along with other misleading economic signals. The College's Center on Wealth and Philanthropy reports that "... estimates of the much anticipated 'wealth transfer' in this country have been a topic of conversation in the nonprofit and financial worlds for years--and the numbers are staggering. By the year 2055 some $41 trillion will change hands as Americans pass their accumulated assets from one generation to the next."

I'm not an economist but I've always found these estimates a squirrely business way too dependent on fragile economic assumptions as indeed was the case in  2007-8. We are now  in another high tech bubble. All the pumping and dumping of stock in companies with no profits, directed  by naughty high testosterone guys who should have never been allowed to leave the principal's office.

Also the banks are back in the sub-prime business. Mostly because no CEOs went to jail. This time at least a few banks will not be too big to fail.

The point is there's a difference between real wealth and paper wealth. The "great wealth transfer" doesn't make which is which clear - at least  not to me.

Takeaway: Let's have some objective evaluation. Meantime - as consultants  - let's advise our clients to concentrate on  the wealth that's already provably there.


The myth: the rich are generous.

The fact: taken as a class the rich are cheap by any measure and not giving anywhere near capacity.

For all the publicity generated  and garnered by Buffett, Gates, Zuckerberg and  others who have taken the pledge there is a much larger sub-class of one percenters with even  more aggregated wealth who've done no  such thing. Charitable giving still hunkers at plus or minus 2% of a generally gaining GDP. Of course that means a modest absolute dollar increase as the percentage enlarges  but it's  nowhere near the capacity of the wealthiest quarter. That 2% hasn't budged since records were begun. Money is pouring into donor advised funds that offer an  immediate tax deduction and safe parking forever.Foundations are sitting on half a trillion dollars or more in tax forgiven cash. Who is that helping?

The growing economic inequality of this nation is well documented. The poor and the near poor (once the middle class) are said by economists from Piketty to Krugman to be increasing in number. But for sure payrolls remain flat. Government funds have been taken away from charitable enterprises. Whether that  money will ever come back is problematic at best. Philanthropy cannot make up the $200-300 billion difference. And  philanthropy does not reach the poorest people who need it the most. It benefits the middle the most and its benefits are skewed toward charities who serve them, not that it shouldn't. Each year's list of gifts at $100 million and up go primarily to higher education and health care. The  only significant major exception I can think of was Joan Kroc's multibillion dollars to Salvation Army.

Takeaway: The rich by and large are not generous.


The reason to be a Giving Institute member should be because we can and should be seeking to advance philanthropy globally. Those of us who come from outside the US and those of us who have served charities internationally recognize that the profile of philanthropy and world demographics are changing rapidly. I was an early  incubator of Giving Tuesday whose Thomas Edison - Henry Timms - will be at the summer symposium next month. He's told me and my students that one of the major challenges for GT now is how to take it global. And that's the challenge for all of us.

Though US giving may still be the world's philanthropic driver this is not necessarily a permanent condition as the global economy increasingly displaces the purely domestic. In my view G.I. can be the deus ex machina here, get it started, and then get out of the way. My vision is  patterned on One World Alliance, a congeries of airlines who code-share, cooperate as well as compete and generally strive for  a more seamless if far from perfect travel experience.

Takeaway:    www.givinginstituteglobal.org. The domain is available. I own it.