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

Sesame Street Explores New Frontiers in Education

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Sesame-Street

February 1, 2016; Fast Company

In the 1960s, creating educational programming for children on television was innovative. Today there are more channels than ever before, and more children first meet Big Bird and other Sesame Street friends on phones and tablets. At the same time, children’s educational needs continue to grow, from obesity to autism, and parent deployment to bullying. Leaders at Sesame Workshop, the parent of Sesame Street, are exploring creative methods of reaching out, educating, and helping children thrive.

Although its programming began on television, Sesame Workshop quickly realized the medium was just the beginning. Sesame Workshop developed websites, cable shows and networks, and 16 million “outreach kits” and events that reach hundreds of thousands of children and their parents through partnerships with over 3000 organizations. With a budget of $104 million, though, more work is needed to fulfill its mission of helping kids grow smarter, stronger, and kinder.

Sesame Workshop recently announced the creation of Sesame Ventures, a partnership with a venture capital firm called Collaborative Ventures, and the subsequent creation of a new fund, Collab + Sesame. The $10 million fund will invest in startups developed by corporations and other for-profit organizations in six broad areas: entertainment and media, food, health and wellness, family development, education tools, and social and emotional development.

We are in the midst of an extraordinary time in the history of how digital technology can change the education, health and welfare of kids around the world,” Jeffrey D. Dunn, Sesame Workshop’s CEO, said in a statement. “History suggests that much of that change will spring from new companies. By partnering with some of these startups, Sesame Workshop can help grow the next wave of kid-focused innovation and improve the lives of children everywhere.”

The Workshop’s funds for its half of this new venture stem from the sale of its stakes in Noggin and Sprout. Both projects were innovative activities of their times: Noggin, the first all-educational cable channel for children, was launched in 1999 in partnership with Nickelodeon, while Sprout, a cable network targeting preschoolers, was developed in 2005 in partnership with PBS, HIT Television Ventures, and NBC Universal.

Projects funded through Collab + Sesame will be offered technical assistance and the opportunity to make use of Sesame Street characters and branding, as well as $1 million each. Although few would give up these perks, Sesame Workshop CEO Dunn places no preconditions that might make one suspect that the group is simply trying to extend their brand on the use of the funds.

Original site: https://nonprofitquarterly.org/2016/02/04/sesame-street-explores-new-frontiers-in-education/

Is a Microloan Any Different from a Payday Loan?

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Microloans

January 12, 2016; Hyperallergic

More and more philanthropy is funded by crowdfunding, and more and more sites are in competition for donors’ attention. Most highlight the heartfelt stories and hide the underlying costs and the meager return on investment. Yet once the costs are evaluated, the variations are staggering.

The meaning of Stephanie Rothenberg’s new project at the ZKM Center for Art & Media in Karlsruhe, Germany, “The Garden of Virtual Kinship,” is hidden at first glance. Visitors are captivated by the plants growing and flourishing in individual glass planters. Each seedling waits its turn to be watered, but one can’t help noticing the large amount of water leaking out and missing the thirsty plants. As your eyes follow the leak to the large tank underneath, one realizes just how much water the plants could be getting—if only the leak were repaired.

The project, part of the exhibition GLOBAL: infosphere, examines crowdfunding and microlending costs and return on investment. Each plant represents a campaign in a certain region of the world listed on the crowdfunding site Kiva. As a donor makes a donation, a plant is watered, yet more water leaks into the tank below. The leaking water represents the money that fails to reach the borrower due to high interest and fees charged by the site.

Combined with a second project, “Planthropy,” on view at Manchester’s The Lowry, displaying how social media affects philanthropy, Rothernberg explores, “the intersection between social media, finance, and philanthropy,” Rothenberg toldHyperallergic. “Both pieces are questioning what it means to donate through the click of a button.”

Why are the costs of microfinancing so high? Some of it is the nature of the industry itself and the need for scale. Many microfinance sites research and authenticate the site projects. These activities are cost intensive, particularly in developing rural areas. Costs are also incurred to market and connect the sites to social media, thereby creating a platform donors are drawn to. Other considerations include the method of computing the interest. Overall, these costs add up to a palatable percentage on a $10,000 loan, but for a $550 or $1000 loan, these same costs take up a much higher percentage.

Many donors are drawn to the stories and fail to examine the costs of investing and the meager returns. The microfinance sites highlight the opportunity to use the funds more than once as the initial loans are repaid, but once fees are tacked on, the amount that can be reloaned is minimal. Further, donors are often unaware of the lackluster rate of return because many sites hide the costs and charges. Some studies even suggest that the high interest rates and fees have similar effects on borrowers as payday loans do in the United States.

Rothenberg appeals to donors to research these sites before investing and ask the hard questions: Does the return justify the donation? What is the loan’s cost to the borrower? What is the method of calculating interest payments? (She’d also like them to share their findings on social media.)

But microloan sites charging high interest rates and fees are not the only models. Another option is to support institutions that create tools to help people in developing countries save. Often, group savings can fuel similar opportunities without the high fees and interest rates. Further, since little money is actually rechanneled, donors might consider donating instead of lending. Websites like GivingGrid only charge credit card fees and ask donors to make a second donation to the site to cover its fees and mission. Another site, Benevolent, is a nonprofit raising donations from foundations and individuals to cover its costs. Benevolent partners with other nonprofits to validate the client’s need, and since the donation is channeled through the nonprofit, donors can deduct their donation from their taxes.

As donors research and invest in sites with lower costs and fees, competition will work to decrease fees and increase return on investments.

Original cite: https://nonprofitquarterly.org/2016/01/29/is-a-microloan-any-different-from-a-payday-loan/

The High Cost of Sexual Assaults on College Campuses

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It is estimated that one in five women are sexually assaulted during their years as college students. The U.S. Department of Education reported that 2013 saw over 5,000 forcible sexual offenses on universities and colleges, and a recent study provides evidence that the actual number of assaults may be six times higher.

In addition to the horrors that sexually assaulted students face, these crimes are placing a financial cost on university and college systems as well. Colleges with high profile sexual assaults also have to deal with such consequences as fewer applications, lowered alumni donations, and loss of funds provided by the Department of Education (DOE). For example, the University of Virginia saw its first decrease in 12 years in its number of applicants after a discredited story ran in Rolling Stone. And Dartmouth saw a fourteen percent drop in applications last year after students protested the school’s treatment of a campus sexual harassment and hazing.

Even more significant, universities facing scandals may lose funding from the DOE. Therefore some leaders claim universities are overcorrecting by unjustly expelling those accused. Faculty at Harvard University and the University of Pennsylvania submitted letters to their administrators denouncing new sexual violence policies utilizing a preponderance of the evidence standard in sexual violence incidents. This standard, required by the DOE, is substantially lower than beyond a reasonable doubt, the standard used by courts in criminal legal actions.

On June 8, 2015, student James Vivenzio filed a complaint in Pennsylvania state court against his fraternity and his school, Penn State. In it, he alleged Kappa Delta Rho possessed a Facebook page containing photos of drunk and unconscious nude women, some of whom looked like they were being sexually assaulted. In addition, the complaint states those pledging the fraternity were given alcohol and drugs, allegedly to facilitate sexual assault and abuse. The suit is also filed against the university for failure to act when Vivenzio reached out to an administrator about the incidents over a year before.

Although Vivenzio isn’t requesting a specific dollar amount, other sexual assault cases against colleges and universities have led to settlements and verdicts from thousands to millions of dollars. For example, in July 2014, the University of Connecticut paid one of the highest reported settlements for a sexual assault lawsuit, $1.3 million, which included $900,000 to a female student who claimed she was cut from the hockey team after being raped by a male hockey player.

In the last five years, the number of sexual assaults at college campuses has skyrocketed. Currently, 118 schools are under federal investigation by the U.S. Department of Education (DOE) for alleged civil rights violations of Title IX related to the handling of sexual assault incidents. At a time when resources have never been harder to raise, universities are diverting millions from education to fund settlements and defend lawsuits. This epidemic is leading schools of higher education to explore a number of difficult issues: how to define consent, how to punish those responsible, and how to measure the reliability of the accusers. At Penn State, a sexual assault and harassment task force developed a 267-page report outlining eighteen recommendations, including enhancing resources at the university’s smaller campuses and disseminating a campus climate sexual assault survey.

At the same time, some government leaders believe schools are hiding or minimizing assaults in an attempt to avoid scandal. These beliefs are based on a recent study compiled by the U.S. Senate Subcommittee on Financial and Contracting Oversight finding 41 percent of colleges have not conducted any investigations of sexual violence in the past five years. Therefore, a bipartisan group of U.S. senators introduced the Campus Accountability & Safety Act in February. If passed, the law would fine colleges and universities up to $150,000 for failure to submit detailed sexual violence reports. In addition, universities that refuse to act in accordance with the legislation could be fined up to one percent of the school’s operating budget.

Recently, United Educators, the higher education insurance company, began offering insurance to cover sexual assault payouts and this appears to have become a disturbingly necessary cost of “doing business.” Between 2006–10, the company has paid out $36 million on behalf of its 1,200 member universities. Seventy-two percent of the settlements were provided to parties suing the schools due to sexual assault incidents.

Original cite: http://nonprofitquarterly.org/2015/06/23/the-high-cost-of-sexual-assaults-on-college-campuses/

Community Colleges Look to Raise Essential Funds from Private Donors

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Recently, LaGuardia Community College leaders took a page from the four-year institutions that share the same metropolitan area. The college is expanding its development activities to increase funding for the scholarships desperately needed by many of its diverse low-income students. Thankfully, these activities are succeeding, as is evident from its recent annual gala, which led to the largest gift—$100,000—that the institution has ever received.

At a four-year institution, LaGuardia’s recent gift would not be newsworthy. But few community college alumni donors earn incomes that can afford hundred thousand–dollar gifts. Many start as immigrants, and most have families of their own. Adding to their balancing act, most students are also required to work while attending school. Two-thirds of LaGuardia’s families earn $25,000 a year or less.

There are 1,100 community colleges, and many are new to raising private donations and individual giving campaigns. LaGuardia’s efforts began thirteen years ago with the tenure of President Gail O. Mellow. Partially because community colleges have not developed a culture of giving, they have small endowments, if any, and few other resources to support needy students. The two-year college with the largest endowment is Washington State’s Clark College. It was founded in 1933 and has an endowment of $47 million. Although this is almost ten times larger than the average community college’s endowment of $4.6 million, it ranks only 676th compared to other college endowments. The average four-year institution has an endowment of approximately $230 million.

Unlike many four-year institutions, which began in the late nineteenth and early twentieth centuries, many community colleges opened in the 1960s and ’70s; LaGuardia opened in 1968. Community colleges were developed by the Truman Commission of the 1940s, but their numbers grew in response to demand by Vietnam veterans returning after the war and an increasing number of women entering college.

Historically, community colleges have depended on government funding to bridge the gap between modest tuition and expenses. At LaGuardia Community College, 69 percent of revenue stems directly from government funding plus an additional 18 percent indirectly from student tuition funded by government grants. This revenue source is decreasing as tax revenue declines due to the recession and other demands on government.

Although four-year public institutions also depend on government revenue, they are not experiencing as large a reduction as community colleges. The Century Foundation, a nonpartisan think tank, found that between 1999 and 2009, funding per student increased by almost $14,000 at private research universities while the increase for community colleges was barely a dollar. While funding remains constant, demand is skyrocketing. For example, earlier this year, Chicago’s Mayor Emanuel announced a new scholarship program for Chicago public school students who have a grade point average of at least 3.0 and are academically ready for college level math and English. The program will cover tuition, fees, and books at any Chicago community college. The large majority of these scholarships will be generated through increased system efficiencies rather than new revenue.

As revenue stagnates, community colleges are forced to make choices between larger class sizes and increases in tuition. Many choose to limit class size. Students unable to enroll are targeted by for-profit institutions. A 2012 report from the U.S. Treasury Department noted a connection between a drop in government funding and an increase in the number of students attending for-profit educational institutions. Students at for-profit institutions have higher student loan default rates and lower graduation rates.

All of these cuts are leading community colleges like LaGuardia to search for private sources to fund scholarships and other essential student grants. Although educational organizations are the second-largest recipients of philanthropy (after religious organizations), most of these funds are directed away from community colleges. For example, large foundations awarded charter schools $297 million in 2012. This amount was almost double what community colleges received, even though community colleges educated over four times as many students. Recently, this disparity has begun to shift, as major foundations, including the Bill & Melinda Gates Foundation and Lumina, are increasing their support for community colleges.

Community colleges are also seeking to expand revenue through individual donations from alumni. Leaders realize that students turn to community colleges for several reasons. Many use them as a springboard or supplement to an education from a four-year institution. Others complete their education at the community college to become a dental assistant, nurse, paralegal, etc. Community college students receiving a degree from that institution have a stronger connection and a greater chance of becoming a donor than those attending a small number of classes.

At LaGuardia Community College, major donors receive lots of attention, but a strong individual funding stream develops with many smaller gifts from a large number of alumni. At first, community colleges may long for the wealthy alumni of four-year institutions, but eventually they learn gifts are more likely to come from donors with a strong connection to the institution. By cultivating these relationships, community colleges can grow a new source of essential revenue.

Currently, many community college alumni are dependable donors, but not to their secondary institutions. A study from the Chronicle of Philanthropy found that donors making less than $100,000 tend to donate a higher percentage of their income than those making substantially more. Wealthier donors tend to give to universities, while low- to middle-income donors tend to give to social service organizations.

For community colleges like LaGuardia, creating campaigns similar to those at four-year institutions could turn alumni into donors and start to stem the tide of funding inequality.

Original cite: https://nonprofitquarterly.org/philanthropy/25253-community-colleges-look-to-raise-essential-funds-from-private-donors.html

The Powerful Philanthropic Intention behind “Women Moving Millions”

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For too many decades, programs serving women and girls stemmed from programs serving men. In response, women’s funds were created to raise, advocate, and focus funds on programs geared toward the unique needs of women and girls. Although these funds continue to grow, many leaders are advocating for more dynamic growth and others continue to question their need.

Women Moving Millions (WMM) issued a call to action in September to women of means across the country. The organization advocated for an increase in giving and a concentrated focus on organizations serving women and girls.

The call to action was accompanied by a new study entitled All In for Her, documenting the growing amount of wealth wholly or partially controlled by women. According to the study, women in the U.S. have the capacity to give an estimated $230 billion a year. Jacqueline Zehner, the chair of WMM, described the sum as “approximately equal to all charitable giving from individuals and roughly 3.3 times the overall charitable giving by foundations and corporations in the U.S. last year.” Much of this capacity stems from an intergenerational transfer of wealth. According to the Boston College Center on Wealth and Philanthropy, women will inherit 70 percent of $41 trillion, or $28.7 trillion, over the next 35 to 40 years.

This large transfer of wealth has the potential to increase philanthropic activities. According to a July 2009 Barclay’s Wealth study titled Tomorrow’s Philanthropist, women give, at 3.5 percent, an average of 1.7 percent more of their wealth to charity than men.

WMM advocates not only for an increase in giving, but giving that is transformative. Currently, only ten percent of donations are chosen using a “gender lens.” The organization defines giving with a gender lens as donors thoroughly “examin[ing] how culturally entrenched gender norms affect women and men differently, and then tak[ing] these distinctions into account when identifying both the problems and the solutions.” Women can change this deficiency by giving larger general operating gifts, combining money with volunteer engagement, and merging their efforts with other donors who share this passion. In addition to giving using a gender lens, thoughtful donors provide capital directly to women and girls in need.

The first women’s funds were created in the 1980s. Their donors have led the way by building and expanding foundations with missions of supporting organizations serving and creating programs designed for women and girls. Currently, there are over 160 women’s funds and they are growing at a faster rate than the greater philanthropic community. A report developed by the Foundation Center and Women’s Funding Network documented 24 percent growth in giving by women’s funds between 2004-2006 ($101 million in 2006, up from $72 million in 2004) while overall foundation giving increased by 14.8 percent. The leaders of WMM are advocating for transformational social change building on the dynamic growth of the last thirty years.

Article original cite: https://nonprofitquarterly.org/philanthropy/25008-the-powerful-philanthropic-intention-behind-women-moving-millions.html