What’s the Potential Impact of This Billionaire’s Charity Network Consolidation on the Philanthropic Community?

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March 8, 2016; Forbes and Jewish Business News

Nonprofit Quarterly has featured many articles on the effects billionaires can have on the philanthropic community. Often, they begin by creating foundations to distribute large checks. Many quickly move on to other projects in the hopes they will expand their impact and scale their ideas onto the community. This is the road Todd Wagner has taken. Sadly, because they are out of reach of most local small service organizations responsible for the majority of the work in the sector, the tools he created and enhanced will likely have little overall effect.

Todd Wagner and his partner, Mark Cuban, saw potential in streaming video before the technology was even fully developed. They founded Broadcast.com in the late1990s, when many were still accessing the Internet via dialup. They sold the company to Yahoo in 1999 for $5.7 billion, the most expensive Yahoo acquisition to date, and although much of the service has been disbanded, Wagner and Cuban became billionaires.

After the sale, Wagner turned his focus to philanthropy. He started the Todd Wagner Foundation in 2000 to support young people who have few opportunities. Much of its work centered on Miracles, a program it created and then spun off to the Boys and Girls Clubs of America, as well as supporting other large nonprofits.

Over the last two years, as his foundation activities became established, Wagner pivoted back to online activities, this time focused on the needs of nonprofit organizations. He founded and bought three online fundraising platforms in an attempt concentrate and expand online charitable giving: Chideo, Charitybuzz, and Prizeo.

Wagner created Chideo in 2014. A portmanteau of “charity” and “video,” the platform offers exclusive videos developed by stars from diverse areas, including entertainment, sports, business, fashion, and culture, to support charities of their choice. Visitors support the charities by viewing the videos.

Wagner acquired Charitybuzz and Prizeo in 2015. Charitybuzz auctions luxury experiences and goods to support charities. Items include meals with celebrities and Fortune 500 CEOs, tickets to movie premieres, and other limited opportunities. Prizeo reaches out to a wider audience by offering similar items in a sweepstakes instead of an auction. Visitors entering the sweepstakes online pay a “small contribution” to enter; contestants can enter the sweepstakes for free by mailing their entry.

Wagner is working to centralize online giving by combining the three platforms into Charity Network. All three platforms continue to operate as for-profit entities providing 80 percent of the money raised to charities. Together, they have raised more than $200 million for 3,000 charities. Although 3,000 on its face sounds like a large number, in a sector of 1.5 million in the U.S. alone, it barely covers the tip of the iceberg.

Sadly, Wagner’s description of his efforts as “disrupting traditional fundraising” could not be farther from the truth. Wagner’s efforts remind me of a dream many small but savvy nonprofit leaders explore but quickly move away from. The analysis begins with the question: What if we could reach out to [fill in your local billionaire or entertainment legend]? If only Wagner could add a method on the platforms for the small local nonprofit, located in the town where said billionaire or entertainment legend grew up, to grab their attention and potentially build a relationship. Now that would truly disrupt traditional fundraising.

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2 Foundations Choose Higher Payouts, Inviting Others to Do the Same

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February 16, 2016; Philadelphia Inquirer

NPQ has often advocated for foundations to consider higher payout rates, taking up the issue in some detail in Buzz Schmidt’s classic, “‘Deliberate Deployment’ or Perpetuity: Questions to Inform Timing Strategies for Philanthropy.” Since then, we have seen a number of foundations moving to deploy more of their assets in the here and now—if not by “spending down” more quickly, then by investing more of their full assets in mission-related activity. But Schmidt also suggests that foundations consider a set of questions in a more “deliberate deployment” strategy, and that is what we see in this story.

Two influential leaders in the Philadelphia area philanthropic community passed away this past January: Patricia Kind and Harold Taussig. The foundations they created, the Patricia Kind Family Foundation and the Untours Foundation, are memorializing their legacy through increased grantmaking. Together, foundation leaders are asking other foundations to join them in giving away more than the five percent required by law.

Throughout Patricia van Ameringen Kind’s long life, she supported some of the most vulnerable. She was trained as a nurse, and this training influenced her philanthropic support of those living in poverty in her community. She and her husband founded the Patricia Kind Family Foundation in 1996 to support the needs of Philadelphia’s poor. The foundation recognizes the essential work of smaller nonprofits by focusing its giving on organizations with budgets under one million dollars.

A day after Mrs. Kind’s death, another of Philadelphia’s most generous leaders, Harold E. Taussig, passed away at the age of 91. Mr. Taussig never forgot his roots as a small-business owner and entrepreneur. He was one of the first to see the value of offering vacationers the opportunity to stay in apartments instead of hotels. Through his Untours Foundation, he provided low-interest loans to startup businesses and other enterprises to create economic opportunity to alleviate poverty throughout the world. Since its inception, the foundation has made more than $7 million in low interest loans.

Although their methods differed, Mr. Taussig and Mrs. Kind shared a dedication to those living in poverty. To memorialize their generosity, the foundations they created are reaching out throughout the philanthropic community, asking other foundations to dedicate more of their resources toward alleviating poverty and underwriting second chances.

Foundations are only required to give away five percent of their assets to maintain their tax-exempt status. Administrative expenses, including staff salaries, are eligible to be included in that five percent, so even less than five percent of their assets may be given in grants each year. Leaders of the Patricia Kind Family and Untours Foundations are advocating for a different use of resources.

“The standard foundation structure of using only 5 percent of foundation assets to address a foundation’s mission is a waste of 95 percent of its assets,” said Elizabeth Killough, director of the Untours Foundation. “On top of not addressing mission, that 95 percent is often invested at cross purposes to the foundation’s mission.”

As the divide between rich and poor continues to expand, will these foundations’ efforts toward building a movement to spend more of their assets on the work of social change catch on?—Gayle Nelson

 

2 Foundations Choose Higher Payouts, Inviting Others to Do the Same

Nonprofits Step into Gap on Curing Childhood Cancer

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Periwinkle

July 20, 2015; Newsweek

The average age of a child diagnosed with cancer is six. Although those suffering from more common cancers have access to breakthrough medications, those with less common forms have little hope. Nonprofits are working to change this deadly diagnosis.

On Friday, Nonprofit Quarterly examined the high cost of cancer drugs and how these drugs’ high price tags do not always correlate to life saving results. Here, we examine the lack of medications available for many childhood cancers.

In the United States, more children die from cancer than any other disease. Each year, one in 285 children are diagnosed with the disease and an estimated 2,000 will eventually die from it. Worldwide, more than 175,000 children are diagnosed, or one every three minutes. Two-thirds of those treated will suffer long-term effects; by the age of 45, 80 percent suffer severe life-threatening conditions.

Four-year-old Penelope had neuroblastoma, a form of cancer originating in nerve tissue. Suffering since the age of one, she received all of the conventional therapies, including chemotherapy, radiation, surgery and a bone marrow transplant, but the cancer continue to grow unhindered. Her father, John London, refused to give up and turned to the Internet. He learned of a study at the University of Vermont using an anti-parasitic drug. The drug was originally used to treat an unrelated infection, but it also seemed to affect neuroblastoma tumors. After learning of the unexpected occurrence, Dr. Giselle Sholler did a specific study and found the drug reduced tumor size in cell lines and mouse models by up to 75 percent.

Mr. London wanted the drug for Penelope, but it was not approved in the U.S. for this use. Although Bayer, the manufacturer, did not have any immediately available, the U.S. Centers for Disease Control and Prevention (CDC) had stockpiled the drug for possible outbreaks of Chagas disease, a potentially deadly infection occurring mostly in Latin America but increasingly seen in parts of the U.S. After two months of calling Bayer, the CDC, and the U.S. Food and Drug Administration (FDA)—which possesses the power to grant compassionate-use approval—Penelope received it. Six weeks later, she was active again.

According to the American Cancer Society, less than one percent of all cancers affect children. But, more children die from childhood cancer than AIDS, asthma, cystic fibrosis, congenital abnormalities, and diabetes combined. And since 1975, the overall number of cancer patients is increasing. While children suffering from more familiar types of cancers, including acute lymphoblastic leukemia, have access to new treatments that have made significant improvements, those like Penelope who suffer from less common cancers have few new options. Part of the reason is the cost pharmaceutical companies incur to develop new drugs: around $1.4 billion. In addition, childhood cancer receives less than four percent of the entire National Cancer Institute’s research budget. This translates to $185.1 million, or forty to fifty therapeutic trials across the country. What’s more, the amount the Institute spends has been decreasing over the last four years.

Because of the lack of interest from Big Pharma and the paltry amounts of government funding, nonprofits have stepped in to fill the gap. Mr. London and another father, Scott Kennedy, whose son, Hazen, also died of neuroblastoma, began Solving Kids Cancer. The organization continues to be led by parents whose children suffered from cancer. Its mission is to “proactively drive the creation of innovative treatments to help kids that are sick right now. By using small, nimble trials, [they] discover new treatment options at revolutionary rates.” Currently, the organization is sponsoring twenty-six trials and raised $650,000 at their 2015 spring event.

St. Baldrick’s Foundation is another nonprofit leading the search for a cure. Started in 1999, the organization raises most of their critical funds by shaving volunteers’ heads for charity. Between 2005 and 2012, the organization raised one hundred million dollars in additional childhood cancer research.

Since less than five percent of children survive relapsed neuroblastoma, developing new drugs and therapies is crucial. Clearly, there is much work to be done for the Penelopes and Hazens of the world.

Original cite: https://nonprofitquarterly.org/2015/07/27/nonprofits-step-into-gap-on-curing-childhood-cancer/

The Next Recycling Frontier: Prescription Drugs

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A 2012 study by the Commonwealth Fund entitled Insuring the Future discusses the link between poverty and healthcare coverage. It found, among many other things, that about one in four American adults, or about 50 million people, have neglected to fill a prescription due to cost. Many experience dangerous conditions due to their inability to afford these essential drugs. Thirty-eight states have laws allowing prescription drugs left over after a person dies or is otherwise unable to use the drugs to be provided to low-income people who cannot afford medicine. These programs cost a few thousand dollars, but recycle millions of dollars worth of lifesaving medications.

Tulsa County in Oklahoma began its drug-recycling program in September 2004. The state was one of the first to develop a program to capture unopened previously prescribed drugs from large institutions including nursing homes. It utilizes twenty-two retired doctors to travel to sixty-eight long-term care facilities collecting the medications for the county run pharmacy. The prescription drugs picked up are dispersed free of charge to low-income citizens of the county. Over the past eleven years the program has filed 172,149 prescriptions worth $16.8 million dollars. Incredibly, the cost of the program over the same period was less than $6,000.

In 1997, Georgia was the first state to create a prescription drug recycling program. In the eighteen years since that time, thirty-seven other states have created similar programs. These programs are lifelines for low-income residents, especially seniors. Seniors take an average of four to five medications a week, and one in five report cutting back on food, heat, or other necessities to afford their prescription drugs. Those that cut back on their medications, including those with cardiovascular disease, can experience serious conditions—for example, strokes or non-fatal heart attacks.

While some states and counties created their own programs, others utilize nonprofit organizations to deliver and provide the medications. SIRUM (Supporting Initiatives to Redistribute Unused Medicine), located in California, has a staff of five and a budget of less than $200,000. The nonprofit was started by three Stanford graduates in 2005; in 2014, they won the prestigious Grinnell prize for work related to social justice. SIRUM uses a patent-pending computer program to match 200 organizations with unused prescriptions to a dozen county-owned and federally-qualified health centers andclinics around the nation. The donating organizations pay nothing to access the program, letting them save the funds they once used to destroy the drugs. Recipient programs with means pay a membership fee equal to twenty-five percent of the value of the medications received. In the years since it opened, the program has expedited the transfer of $3.7 million worth of prescription drugs to 35,000 patients.

Lincoln-Glen, a nursing home in California, takes part in the program. Once a quarter, Deane Kirchner, the director of nursing, spends less than an hour logging and packaging the prescriptions for shipping. Throughout the year, the 50–75 bed facilitytypically donates about $6,000 in medications at a cost of $40. The recipient is the Santa Clara County Public Health Pharmacy, who distributes the prescriptions countywide based on need.

The largest state-run program is the Iowa Prescription Drug Corporation. In Iowa, the drugs come from the drug manufacturers and pharmacies themselves. They maintain prescription safety stocks to avoid shortfalls. About three percent of drugs worth 270 billion reach their expiration dates and are destroyed. The budget of the nonprofit organization’s program distributing the drugs is $500,000. In the eight years it has been in existence, it has delivered $13 million worth of drugs to 52,000 low-income patients.

Original cite: http://nonprofitquarterly.org/2015/05/26/the-next-recycling-frontier-prescription-drugs/

Sweet Deals for Corporations Result in Deep Losses to Residents

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Philadelphia, like many large cities, is a portrait of the haves and the have-nots. Often, the source of this disparity is the sweet deals cities and states provide to large corporations to attract their corporate headquarters. These tax packages and other incentives allow corporations to skirt their tax liabilities at the expense of poor residents.

While some cities are thriving, others contain multiple neighborhoods housing low-income residents. Philadelphia is Pennsylvania’s largest city and home to rich American history, including the Liberty Bell and Independence Hall. It is also home to over 400,000 residents living in poverty, as well as the largest broadcast and cable company, Comcast.

Comcast built its current home in downtown Philadelphia in 2008. Currently, the company plans to expand its headquarters using $40 million in state and local tax dollars, although the company’s revenues topped $68.8 billion last year. Having shut down its plans for the largest merger in cable history, it still seeks to spread its 8,000 local employees into a second, $1.2 billion structure that its architect describes as a “tower…like nothing that has happened before,” rivaling skyscrapers in New York and Chicago.

Neighbors of the $1.2 billion building are not only the skyscrapers that surround it, but the homeless people who take shelter at the nearby public transit station. While Comcast is growing, its Philadelphia home is struggling. Last year, the city’s revenue amounted to slightly less than $7.1 billion, and it struggled to provide services to roughly 1.6 million residents living in poverty, including 200,000 people in families of three of more people bringing home less than $9,700 annually.

Philadelphia is currently exploring whether it should continue to allow Comcast to use its public roadways and other property to install cables and pipes for free. The city commissioned an assessment of needs and of Comcast’s performance. The results identified lackluster performance including lengthy signal outages, the lowest overall customer satisfaction rate of all areas studied, and five times the regulatory-mandated number of customers failing to reach customer service.

Equally disturbing, more than a third of Philadelphia’s residents do not have broadband access, and average Comcast fees of $154.86 are actually higher than those in other comparable markets. Comcast has a program to bring online access to low-income residents, Internet Essentials, but it has less than 15 percent participation in Philadelphia, in part because eligibility hinges on lack of Internet access for a minimum of three months prior to entering the program.

Comcast tries to defray these complaints by highlighting their contributions to Project HOME’s technology lab. Project HOME is a $29 million nonprofit serving homeless and low-income Philadelphians. According to Comcast Foundation’s 2013 tax returns (the most recent available), it provided a grant of $13,000 to the program located in one of the poorest areas of the city. Although few other corporations are interested in providing services to this community, the grant is dwarfed by the foundation’s total contributions across the country of $16 million. In addition, foundation funds are used to expand the corporation’s business by paying off customers’ old debts to encourage them to choose the cable giant again as they enter new residences.

Like Comcast, many corporations and municipalities highlight their philanthropic activities as evidence of being a good neighbor as well as reasons to offer them incentives in exchange for their corporate headquarters. Often, these activities pit one locality against another at the expense of essential city and state programs and services for the poor. (A recent example is the new billboards towering over Illinois highways asking drivers “Illinoyed by higher taxes?” paid for by the state of Indiana.) Cities need business and property tax revenue to fund education and social services yet more and more are exempting the larger corporations, leaving small businesses and individual residents to pick up the tab.

Original cite: https://nonprofitquarterly.org/policysocial-context/26035-sweet-deals-for-corporations-result-in-deep-losses-to-residents.html