Economy and Philanthropy | Further Discussion and Resources

747px-George_Washington_Carver

“George Washington Carver” by Frances Benjamin Johnston. This image is from the United States Library of Congress’s Prints and Photographs division.

“Since new developments are the products of a creative mind, we must therefore stimulate and encourage that type of mind in every way possible.”

~ George Washington Carver (1864-1943)

Inspiration

Someone who appreciates the sentiment conveyed in that quote is Sir Richard Branson, author of, “Screw Business as Usual” (Portfolio/Penguin, 2011). The book includes examples of several successful businesses – some owned or fostered by Richard through the Virgin Group, but not all – that do quite well financially by doing good socially and environmentally.

Nonprofit professionals should enjoy reading Richard’s “take” on what makes a business successful, and proceeds from the sale of the book support the work of the corporate foundation, Virgin Unite.

I was greatly impressed by Conscious Capitalism: Liberating the Heroic Spirit of Business (Harvard Business Review Press, 2013), by John Mackey and Raj Sisodia.

“Purpose-driven motivation is intrinsic motivation and is far more effective and powerful than extrinsic financial incentives …. A higher purpose gives great energy and relevance to a company and its brand.”

Discussing not only John Mackey’s company Whole Foods Market, the book highlights success stories of purpose-driven companies world-wide like Southwest Airlines, Google, TATA and UPS. It would seem to me anyone thinking about starting a business – or anyone already involved in business – should stop to read and consider it. Included is a chapter on social responsibility and philanthropy, and an interesting debate regarding the teachings of Milton Friedman.

Jeff King has written an excellent review of the book for Forbes that you might, “Only Conscious Capitalists Will Survive” (December 4, 2013). I’ve also written my own review on Goodreads.

I also enjoyed a CNN interview featuring businessman John Paul DeJoria in January, 2015, “Should the rich pay more to help the poor?” Mr. DeJoria discusses the American Dream, taxation, philanthropy and the critical role business leaders can play in helping others learn how to succeed personally and contribute to a healthy economy.

Have trouble embracing trickle down economics? You might enjoy the contrarian view of Mark Karlin in his article for Truthout, “The Limits of Trickle-Down Philanthropy” (January 10, 2016).

How Nonprofits Affect the Economy

Zack Halper and Patrick Sullivan have written, “IRS Projects Sector’s Worth At $2.939 Trillion” (March 21, 2014). “The biggest gains in assets compared to the previous year were investments in public securities ($691.347 billion), investments in other securities ($514.513 billion), and other assets ($202.413 billion). Those same categories in 2009 were at  $609.991 billion, $444.271 billion, and $162.385 billion. Between January 2, 2009 and December 30, 2011, the Dow Jones Industrial Average jumped from 9,034.69 to 12,217.55, with the nadir of 6,626.94 occurring on March 6, 2009.”

Huff Post Impact (The Huffington Post) posted an infographic by the Rebecca Gordon Group, “How Growing Nonprofit Sector Impacts Economy” (November 13, 2012).

Sarah Halzack has written a level-headed article for The Washington Post, “Can Nonprofit Organizations Boost a Regional Economy?” (February 10, 2013). “And while such enterprises are focused more on executing their mission than on raking in big money, they still consume goods and services just as a private sector company would. They also hold events and conferences, which can create spending and bring visitors to the county.”

Rick Cohen wrote a thought-provoking article for NPQ, “‘Too Big to Fail’: Megabanks Bigger than Ever, Nonprofits Growing Slower” (October 30, 2015). “It might be time for nonprofit activists to ask the presidential aspirants – in a nonpartisan way, mind you – what they will do to boost the revenues, assets, and influence of nonprofits to compete with the massive growth of Wall Street power.”

New Thinking

Click here to reach Amazon and purchase the book.

Dan Pallotta challenges the fundamental premises underlying the charitable sector in, “Uncharitable: How Restraints on Nonprofits Undermine Their Potential” (Tuft University Press: 2008).

“By denying charity the tools of capitalism while allowing the for-profit sector to feast on them, we place charity at a severe disadvantage.” Dan notes, “We allow people to make huge profits doing any number of things that harm the poor, but prohibit anyone from making a profit doing anything that will help them. Want to make millions selling violent video games to kids? Go for it. Want to make a million funding the cure for childhood leukemia? You are a parasite.” Pallotta suggests that perhaps the fundamental principles underlying the nonprofit sector need rethinking.

You might also enjoy reading Dan’s book, Charity Case: How the Nonprofit Community Can Stand Up for Itself and Really Change the World (click to reach Amazon.com). In addition, I enjoy reading Dan’s blog on the Harvard Business Review. Here is a noteworthy post (January, 2013), “Business Can’t Solve the World’s Problems, But Capitalism Can.”

An article by Andrew Ross Sorkin for The New York Times in 2013 definitely falls under the category, “new thinking.” From, “Plan to Finance Philanthropy Shows the Power of a Simple Question”:

“Ms. Beck was a graduate student at the Wharton School of the University of Pennsylvania when she blurted out a question that had been consuming her: ‘Could there be a Nasdaq for not-for-profits?’ The idea — creating the equivalent of a profit-driven stock market for nonprofits — might seem counterintuitive at first. It was a ‘radical idea, and maybe I was naïve,’ she acknowledged. But for the last year, she has pursued the concept. It has gained enough traction that it has won her meetings with executives at Goldman Sachs, Deutsche Bank and members of the Obama administration.”

Gus Standing has written, “The 5 Biggest Lies of Global Capitalism” for World Economic Forum (December 12, 2016). “The first thing to do is confront today’s system of rentier capitalism. This is where a growing share of wealth goes to already privileged owners of assets (rentiers), while income from most jobs dwindles in value. John Maynard Keynes predicted in 1936 that the development of capitalism during the 20th century would result in “the euthanasia of the rentier”, as rent-seeking became harder. The reality has been the reverse. Corporations and financiers have used their growing influence to induce governments and international organizations to construct a global framework of institutions and regulations that enable elites to maximize their rental income.”

And here comes a sea change! Catherine Rampell wrote for The Washington Post, “Millennials have a higher opinion of socialism than of capitalism” (February 5, 2016). It remains to be seen how future generations will change our economic system in the United States, but I suspect change will come.

Weathering Storms

Gaba Salman wrote a helpful article for The Guardian that all nonprofit staff should read, “How Charities Can Forecast Effectively” (May 28, 2013). “Today’s economic climate means that income streams are unpredictable, with no guarantee that grants and contracts will be renewed. It has thrown the need for realistic and effective charity forecasting into sharp focus, with finance teams aware that they must pick the most appropriate tools to boost their financial foresight.”

Trevor Neilson of the Huffington Post wrote a timely article in the “Impact” section, “What Roubini Just Said and Why Those Working in Philanthropy Should Listen” (July 11, 2012). Trevor suggests that in this uncertain economic climate nonprofits should think differently about fundraising, decide what not to do, and to value performance over passion.

“Non-profits need to embrace the Apple slogan and add new and innovative fundraising strategies to their current approach. The goal is to increase the number and quality of donors by reaching new audiences with new messages. Crowd-funding, cause related marketing and other new areas in philanthropy should also be aggressively explored. Far too many organizations just hope that their existing donors will sustain them. If what Roubini predicts occurs…they won’t.”

There is a terrific blog post by Marc A. Pitman, CFCC, “Recession-proof Fundraising.” Marc provides helpful insights for nonprofits about better managing work in a challenging economy. A more recent addition to this discussion is, “How Nonprofits Can Thrive While Awaiting Economic Recovery” by Nell Edgington in Social Velocity.

The Center on Philanthropy at Indiana University produced an important research report, “Financial Literacy and Knowledge in the Nonprofit Sector” (February 2012), underwritten by The Moody’s Foundation. “For the past two decades, a growing wealth of economic and financial data has become available to help inform effective decision-making within the nonprofit sector. It has become increasingly important for nonprofit organizations to have the knowledge and skills that are necessary to apply and use this data for decision-making and benchmarking.”

I included this link also in my blog article, “Building Relationships with Professional Advisors,” because donors are seeking the advice of professionals in the financial industry to ensure the nonprofits they are being asked to support are financially sound, and actively managing their finances with sound principles. This report bears a “double post.” Here is another article that points out some of the financial challenges the nonprofit sector faces, “Nonprofit Demand Is Up, But More Than Half Of Charities Only Have Enough Cash For 3 Months Or Less,” from Huffington Post, Huff Post Impact (April 4, 2012).

Credibility

Click to reach the website.

From GuideStar: “Assessing a nonprofit’s financial health is time-consuming and challenging. Which metrics and trends should you focus on? How should you assess surplus size, revenue diversity, and financial stability? What’s appropriate to look for when comparing organizations? Developed through a partnership between Nonprofit Finance Fund (NFF) and GuideStar, Financial SCANSM standardizes financial information to improve analysis and communications.” I admit I would be using this tool to scan my own organization to determine if/where improvements can be made.

I urge all nonprofits, no matter how small they may be, to get onto the GuideStar website, find your tax return (they are automatically uploaded to the platform – you have no choice, as they upload them automatically), and take the time to flesh-out your nonprofit’s profile. I have done this for nonprofit clients before with great success. It takes time, but you can’t buy the kind of credibility attaining a GuideStar seal provides, demonstrating your organization’s commitment to transparency.

If you are curious about other ways in which I use GuideStar, see my professional website. Click on the tiny three bars at the top of the page and you will discover a widget with direct links.

Keep Innovation Alive

Innovation is one of the buzzwords of the 21st century!

Innovation is one of the buzzwords of the 21st century!

Change is stressful, and innovation is all about change. Although aimed at business, there is some excellent, simple advice to be found in TRC’s Staffing Services, “How to Keep Innovating” (June, 2012). As a counterpoint, you might also enjoy, “Chelsea Clinton Makes Her Move” in Fast Company (May, 2014), where she remarks (and I agree), “‘Celebrate those who have the courage to be second,’ says Chelsea, ‘because I do think that often there is this claustrophobic pressure to innovate.'”

Although it does not focus on nonprofit work, I enjoyed reading this interview of Curt Carlson who heads SRI International, by Dean Takahashi in VentureBeat, “Now’s the best time for innovation – just don’t choke it,” (July 23, 2011). You can read the entire interview by following this link. “The good news is this is the best time for innovation in the history of the world. Every field is wide open ….” I personally believe this is also true of the nonprofit sector, and the possibilities are endless.

Martha Lane Fox and Jonathan Goodwin have written for The Guardian, “Doing Social Good With the Help of Digital Entrepreneurs” (June 13, 2013). ” … We need to help accelerate the pace of solutions to challenges such as social care or the provision of high quality education to every single young person. How? There is one especially vigorous sector that is yet to be tapped in the fight against health, income or employment inequality: technology.” Food for thought!

A “tweet” from Amy Sample Ward, CEO of NTEN: Nonprofit Technology Network (September 20, 2013), sums it up well, “People need to innovate like they need to breathe.”

Crowdfunding

Devin Thorpe who has written for Forbes, “Why Crowdfunding Will Explode in 2013” (October 15, 2012). And, it did! You might want to follow Devin regularly online, as he provides continuous insight and inspiration into social good activities globally.

From Mashable comes, “Is Crowdsourcing the Secret to Creating Innovation in Government?” (June 13, 2012). A more recent update from Mashable you might enjoy is, “Could Crowdfunding Help Build Cities?” (May 29, 2013).

Sonal Shah wrote a terrific article for The Huffington Post, “Smarter, Creative Philanthropy for a Complex World” (November 23, 2015). She mentions impact investing and rewarding entrepreneurial approaches to public-private partnerships: “… Philanthropy needs to invest in new financing mechanisms to leverage both grant dollars and investment capital for impact.”

Given the continued expansion of crowdfunding as a way to raise money for a wide range of concepts and products (and the entry of Bitcoin onto the economic scene), I updated Carolyn’s Nonprofit Blog. Click on the tiny three bars at the top of the page. Under, “How This Blog Works,” see the page of articles and resources focusing on Bitcoin and crowdfunding.

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