A NEW AGENDA

A NEW AGENDA

How does President-elect Barack Obama view the role of private philanthropy in the civic life of the nation, especially now?

There is not much of a record and little is known of his giving proclivities. We know the plight of the economy is his first order of business as it must be and with government funds and energies diverted to bailouts and massive public spending there is and will be far less for all kinds of private charities. The prognosis for private giving in the near term - at least a year and maybe longer - is uniformly gloomy. We can expect President Obama to urge on private giving and we can expect him to encouurage all of us to donate to the charities of our choice. But is that enough?

Like FDR Obama understands the presidency is a bully pulpit and I hope he might use it to convene a “White House Summit Conference on Philanthropy” next year or the following at the latest. (The last one was held in 1975). I would bring the best and the brightest together. Here are just a few examples to get the dialog moving …

• The gross product of American philanthropy has been stuck at around 2% of GDP for as long as giving trends have been measured. Why hasn’t the needle moved in a country of such wealth? Why aren’t more people giving more money to US and international charity? What can the government do through tax policy or otherwise to encourage greater public involvement?

• Private foundations are sitting on almost a trillion dollars worth of assets. They claim the income that collective corpus generates makes possible their annual grant making. First, where is it written that private foundations should exist in perpetuity (aside from their charters)? Second, after a generation or two why shouldn’t they be required to transfer their assets to a community foundation or to spend them down and liquidate? Third, why isn’t there a sliding payout scale with the wealthiest having to spend far more than 5% a year on grant making (when most of them earn in the double digits on their portfolios) and maybe the smaller, newer ones be given say ten years of lower payouts maybe 3.5-4% of assets?

• If the SEC’s oversight of Wall Street (which is let’s face it famously de minimus) was as lax as the IRS’ oversight of charities, anyone of the presidential candidates would likely be pounding a shoe (or a pump) on the table. Is there a reasonable regulatory standard possible at the federal level? And could it to some degree supersede the crazy quilt of state regulation that ranges from the ridiculous to the outmoded?

• So-called “faith based” philanthropy – an extension of President Bush’s view of the cosmos – has been directed mostly at human service agencies. Yet this grouping has shown the greatest decline in private support of any category of charity (according to Giving USA Foundation data). And they have also suffered the deepest cuts in federal aid. Why?

The Giving Institute of which the Oram firm is a member is going to associate with others to develop the convening power necessary to bring this off. Our new chairman Nancy Raybin has asked me to take this on;I will do all I can to move the idea along. There is already considerable interest among charity leaders in helping the President create an agenda for phianthropy as the November 13th Special Report in the Chronicle of Philanthropy makes clear.

If you have ideas for the “Summit” let us know!

WAIT ! IT GETS WORSE.

This morning's Wall Street Journal page one story on the decline in charitable gifts caught everyone's attention and generally depressed the holiday mood. Charitable gifts - especially from sinking corporations - are way down. But this is not exactly news. Most charities in New York, where the stock market exerts an inordinate and irrational influence over behavior, have felt the pinch some more than others as is always the case. Human service organizations have suffered more than any other category. Most of us have been living this downturn-turned-recession-now-depression for a year or more. But seeing the cold type is jarring, no question.

By the way it is interesting to note that the New York Times has stopped reporting the dollars raised at the charity events ("gala" may not be the word these days) they cover in the one-page photo spread in each Sunday Styles section.

So let's review:

• Bonuses are being paid on Wall Street this year. Yes. They may be less and they may not show at the very top. But there is a large pool of upper management people who will see year-end rewards. Are they your donors? Why not?
  
• Those of us who have been through this before are well aware that gifts go down in hard times. But giving always bounces back and usually faster than the rest of the economy. This would not be the time to give up no matter how discouraged you may be feeling.
• Money is being made. Those who are making it may not be your usual donors. The job is to find out who they are and then to ask them. Bankruptcy lawyers for example or the shakeout experts who are feeding on the corporate meltdowns.
  
• As a whole charities are not very well managed. There is unnecessary duplication. Of course this doesn't apply to you but to the other guy. Nevertheless there will be a shakeout. But here again nonprofits tend to be a lot more resilient than other economic sectors. Many of them run lean because they must. Lack of resources - usually a bad thing - may not be so terrible in a situation like this.
• If our government can come up with a trillion dollars of our (your) money in just six weeks we are obviously a very rich nation. Lots of people are hurting and they deserve our help through the organizations we serve. But far more of us are feeling it just around the edges; their losses are on paper and unrealized. I myself am down 30-40% for the year - on paper. Just as you are. But I have not stopped giving. Either have you. And either will your donors - if you ask them!

Happy Holidays.

National Philanthropy Day

"Economists say the downturn may
develop into the worst recession since 1981-82."

-- New York Times November 13th,page one.


Today is National Philanthropy Day. A "celebration" marked the occasion here in New York which generates an estimated 25-30% of the country's annual giving "handle." How 2008 will turn out philanthropically won't be known for a few months. But many believe a sharp drop is possible if not likely.

We are hearing that the rich "feel" poor. The Sunday Times styles page that photographs the wealthy and the wannabes at charity events around town have for the most part stopped reporting the amounts of money raised at them.

Unlike many who work as consultants or development officers today I was around for that recession plus two or three before it, and of course for the bubble that burst in 1990. I have little recollection of the 1981-82 recession. So I went back and took a look. Adjusting for inflation in 1982 Giving USA reported about $127 billion contributed to US charities; there was good growth through 1987 ($150 billion). Then came the dot.com collapse and in 1992 - following two flat years at around $150 billion- there was a leap to $165 billion. And there has been strong growth since - up to $306 billion plus in 2007.

What I like about history is the arc of perspective it provides. Long term philanthropic trends - from 1967 forward have always been growth oriented with a few flat years now and then, and modest growth other years. But steady growth. It also seems to me that the swings are less for nonprofits than for the economy overall. That may be because charities over-all are more risk averse than the economy in general. Perhaps because of that and because they are mission and service driven most charities attract people who are less motivated by greed and self interest.

Whatever the environment and whatever 2008 brings by way of total giving in the US charities have no choice but to press on. Shoulder top the wheel, nose to the grindstone, the usual. The bad news is this is rough. The good news is that the story history tells is a hopeful one.

So happy philanthropy day! Hoist one for me.

TOUGH TIMES

Tough times?

Sure. Getting hit the hardest – even before this current mess - are human service agencies. As treasurer and president-designate of Women’s Prison Association, I really see how perilous the situation is in New York – regardless of how the election turns out.

I’d like to invite you and one guest* to be with us December 4th at the Yale Club in New York – to meet our exciting panel and to participate fully in our program:

Are Charitable Dollars Really Getting Where they’re Needed Most?

Details are in the attached invitation. Sorry for the technology but if you’d like to come, please paste the link below into your browser and then RSVP directly to the e-mail address shown there (and please copy me if you would). If you have any questions please feel free to call me at 212 889 2244.

I hope to see you there. All good wishes and thanks.

*We will wait list any additional people you might wish to bring. Please let us have their name(s) as well.

file:///C:/Documents%20and%20Settings/Henry%20Goldstein/My%20Documents/MyFiles1/Giving%20USA%20Fdn/Gurin%20Forum/Invitation%20to%20Gurin%20Forum.doc

Dollars to Dollops, Din to Discipline

Through the din of recent events comes a bright note worth cheering about and telling donors about. Who among us isn’t a little bit guilty of looking for our benefits however they may come? On page 303 of the 451-page bailout bill signed last Friday by President Bush was a two-year extension of the IRA Rollover provision. See “(3) TREATMENT OF CONTRIBUTIONS TO ELIGIBLE RETIREMENT PLANS.” The full text of the Senate bill can be found here.

And speaking of the din, by all measures we are now indeed striding forward into a recession. Take heart. In such times, best practices become our future foundation for survival and success.

We encourage everyone to stick to a discipline of connecting well with donors and prospects to see you through. In forty years of giving data collected by Giving USA through multiple recessions and economic slowdowns, giving has always trended up. Hard to believe? According to the latest issue of Spotlight, the Giving USA newsletter, during the years from 1967 to 2007 -- which saw some big challenges -- “Total giving has increased in current dollars in every year but one....” (A tax law change in 1986 prompted people to “give early,” and skewed the pattern for 1987.) “In current dollars, before adjusting for inflation, giving has increased an average of 8.4 percent in years without a recession. In years with a recession, giving has increased 6.2 percent (also in current dollars). The average rate of change [emphasis is mine] in giving during a recession is a drop of 1 percent...without a recession, [the average rate of change is an increase of] 4.3 percent.”

The moral: Focus on stewardship -- recognition, information about how the donor’s gift made a difference, site visits. Focus on authentic relationship development. Focus on strategic positioning. No matter what is going on in the markets, people still want to find ways to make a difference, to help their communities, to keep beauty, ideas and wonder in the world, to save our beleaguered planet so that we may continue to live here.

Look at this: Today’s San Francisco Chronicle, announced an upgrade of a gift from Lorry I. Lokey, the founder of Business Wire, to $75 million from $33 million to help build a stem-cell institute at Stanford. Mr. Lokey got interested in response to a clear need -- just as the tech bubble was bursting in 2001.
-- Marilyn Bancel

Update ...

As reported in today's New York Times it turns out Starr Foundation had divested much of its AIG stock but in May still had 15.5 million shares of its corpus parked there. So instead of losing 90% of its 3.3 billion value (in 2006) it lost only two-thirds! All commitments will be honored according to foundation president Florence Davis. A tough break for many charities around the country but especially in New York which was particularly favored in Starr's grantmaking.

The piece goes on to note that many other foundations funded with Wall Street excess wealth are now having to downsize but because of its size Starr really sticks out.

The market continues to gyrate and charities are understandably nervous. This morning the letter below came across my desk:

"Dear Colleagues:

When I was growing up on Long Island, we would go on school trips to the United Nations. I can still recall the awe with which I entered the building as a young child. Looking down from the balcony of the General Assembly Hall, I considered myself in the "inner sanctum," where major international events — most vividly, the vote on the creation of Israel — took place. So you can imagine in a week that began with a rally to protest the appearance of Iran’s president at the General Assembly, I was deeply moved to sit on the assembly floor as President Shimon Peres spoke. It felt like he was returning something good to this inner sanctum.

President Peres approached the podium shortly after Hamid Karzai, president of the Islamic Republic of Afghanistan. President Karzai spoke of the huge challenges facing the international community and explicitly recognized the need for Israel to live in peace and security. President Peres followed, communicating the readiness of the people and government of Israel to reach peace with its neighbors. He concluded with wishes for the Jewish New Year, placing a yarmulke on his head, and invoking a prayer in Hebrew from our tradition. As the hall broke into loud applause, several people shared the same sentiment: What a privilege to witness this moment — the president of Israel, a Nobel Laureate, speaking in Hebrew on the 60th anniversary of Israel before the very body that created the Jewish state.

It was a similar feeling of privilege that infused Alan "Ace" and Kathryn Greenberg’s home on Thursday evening when our major donors came together to launch our 2009 Annual Campaign, as they have for the last 22 years. Guest-speaker, Governor David Paterson, surveyed the challenges facing New Yorkers and was eloquent in extolling the leadership role of UJA-Federation.

We are framing this year’s campaign as one "for those who can," recognizing that while virtually everyone has been impacted by the tumultuous economic events that continue to unfold — and some will not be able to make gifts or will have to reduce them — most of our major donors still can. Anticipating the difficult campaign ahead, campaign chairs Howard Milstein and Linda Mirels proposed, and the Executive Committee authorized, that increases leading up to the Greenberg event will be placed in a matching challenge fund to encourage new and increased giving.

While every dollar has not yet been counted, I am pleased to report that the philanthropic leadership of the New York Jewish community pledged $43 million to UJA-Federation’s 2009 Annual Campaign, surpassing last year’s record-setting level by $2 million! The challenge fund raised close to $3 million. In one evening, 110 people came together and proclaimed, "Despite this economic environment, we are among the most privileged men and women on the planet, and we are certainly the most privileged generation of Jews." The recognition of blessings filled the room, together with appreciation of the indispensable role of UJA-Federation and its network of agencies, particularly during these times.

Colleagues, this will be a challenging year. My hope is that each of us, and those close to us, will enjoy a year of health and will be able to stay connected to the blessings of life, which are, at the end of the day, the most important assets we have.

Shanah Tovah to you and your families. May this be a year of peace for Israel, our people, and for all men and women throughout the world.

Shabbat Shalom

John"

I have no sermon to preach - except that your passion for a cause will show you the way!

Star(r)light ...

In my view The Starr Foundation has been one of the best in New York. Its management is highly competent, it is open to new ideas and people coming in; it is one of the few major foundations who will make operating grants rather than limiting itself to capital (makes those grants as well) or specific projects. It is no-nonsense. A program officer there once told me "we are here to give away money and I am always on the lookout for good things to give money to." That you don't hear much. What you get is "you don't fit our priorities," i.e. foundation-speak.

Starr is the giving arm of AIG.

Oh oh.

The foundation got its start-up money from the estate of Cornelius V. Starr, an insurance magnate who developed the Asia market before WW II - and thereafter was funded with AIG stock. NPR and Bloomberg news reported on Monday that AIG stock was once 90% of its portfolio. Starr's president Florence Davis noted that Starr had sold two-thirds of its AIG holdings between 2006-2008. But exactly what the foundation's corpus is right now is unclear because the sale of price of AIG stock fluctuated and we don't know what investments replaced it, or what they may have earned and she didn't say. But she did promise that present commitments would be honored.

Starr's tax return for 2006 (Form 990) is the latest posted on Guidestar and showed the fair market value of assets at over $3.3 billion. Assuming a yearly 5% payout, the norm, yields grants over $150 million. Close enough. In 2005 they granted out $162 million.

If Starr was 90%invested in AIG stock in 2006 - the year of their last tax filing - that would have reduced the corpus to $330 million and cut grants to about $15 million - about the size of many of the family foundations I work with. How much did they actually lose? AIG stock traded at $3.93 at noon EDT today. Ouch.

In the past Maurice (Hank) Greenberg the former CEO of AIG essentially controlled the foundation. For example he had to sign off personally on an eight-figure gift to an Oram client a few years ago and also gave the nod each time on several seven-figure grants to another one. He may have stepped away but we really don't know. He is certainly otherwise occupied.

Everything here you could have pieced together elsewhere. With one difference: Starr has been a real leader in philanthropy, and a great example for how - on the good side - foundations should behave.

It's easy to stay angry at AIG. But join me in hoisting one for Starr and for hoping they'll come back - bigger and stronger than ever - with the most diversified portfolio we've ever seen!