Posts Tagged ‘social capital’
January 13, 2012
The Nonprofiteer’s readers might enjoy this account of a pissing match between Warren Buffett and Mitch McConnell. The Senator from Kentucky has been urging the Sage of Omaha to make voluntary contributions to the Treasury if he felt he was undertaxed. Buffett has now responded that he’ll match any such contributions made by Republican Senators.
This dialogue makes in a different form Milton Friedman’s point as recounted by the Nonprofiteer yesterday. Voluntary contributions to reduce poverty (or do any of the other things we rely on the government to do) are insufficient, because everyone would be willing to pay his/her share only if s/he could be sure that everyone else would be willing to pay his/her share. Otherwise, no dice.
Doubtless McConnell will ignore Buffett’s challenge and continue his nonsensical bluster about Buffett’s freedom to pay extra if he feels “guilty” about his low tax rate. But the point isn’t, of course, how Buffett feels, or even what he does—it’s what everyone else does. And if McConnell and his buddies don’t donate to the Treasury, then they are poster children for the free-rider problem—thereby proving Buffett right: philanthropy is not sufficient and taxation is necessary.
H/T the indispensable Rick Cohen at The Nonprofit Quarterly.
Tags:501c3, charity, donors, IRS, nonprofit, not for profit, philanthropy, Poverty, social capital
Posted in Coverage of nonprofits, Current Affairs, Finances, Government grants, Nonprofits--General, Philanthropy and Taxation, Poverty, Private Philanthropy | Leave a Comment »
March 17, 2011
Here’s something strange: a concept thrown around routinely and casually in conversations among nonprofits and philanthropies is simultaneously the subject of fierce debate and sometime disapproval by the Internal Revenue Service, a committee of the American Bar Association, and other experts. What is going on?
The notion of Low Profit Limited Liability Corporations (L3Cs, for short) is that they’re a vehicle for doing well by doing good and therefore an improvement over the typical nonprofit structure. L3Cs are permitted to earn profits but proponents claim that their praiseworthy intentions—to end hunger or provide clean water or whatever—make those who lend to them eligible for the special tax benefits attached to program-related investments. In other words, this is a legal structure presented as a technique for gaining access to capital (always a struggle for nonprofits) by providing a tax benefit to lenders.
Of course, foundations already get a tax benefit for program-related investments in regular nonprofits, so what, exactly, is the appeal? In theory, foundations might be more interested in program-related investments that generate a reliable flow of capital (in the form of profit) than in program-related investments that generate nothing but additional nonprofit programs and services. Likewise in theory, regular venture capitalists outside of foundations will be more interested in making investments in profit-making entities than in pure nonprofits. This—the notion goes—will increase the amount of capital available to support general good-guy behavior.
However, a number of scholars and lawyers (Daniel Kleinberger of William Mitchell College of Law prominent among them) see the L3C as, at best, redundant and, at worst, an invitation to fraud. They point out that regular limited liability corporations can be organized for any purpose, including public-spirited and low-profit ones. They point out that the IRS has not yet issued (and does not seemed inclined to create) a rule awarding automatic program-related investment status to any investment in an L3C. So anyone who invests in an L3C on the basis that it provides a higher return than a regular nonprofit with the same tax benefits will find out to his/her sorrow that this is not the case.
What strikes the Nonprofiteer as peculiar, though, is that in the many discussions she’s heard and read about L3Cs, only one mention (specifically, Professor Kleinberger’s Nonprofit Quarterly article) has ever surfaced of this opposition from the bar and Federal regulators. Not until her tax lawyer Stuart Levine asked about the [successful] efforts in Illinois to create L3Cs did she realize there was anything controversial about the phenomenon. After bringing her up to speed Levine wisely said,
L3C’s don’t work unless there is a change in federal tax law. In other words, L3C’s are a little like Oreo-Tycin-Myacin—the wonder drug for which there is no known disease.
L3C’s raise difficult issues of fiduciary duty and the inherent conflict between “charitable” purposes and “business” purposes. At the least, these conflicts cannot be dealt with via a quick-fix state statute.
Doubtless the Nonprofiteer spaces out on frequent occasions and misses aspects of what’s said or done in the sector. But she suspects there’s also a disconnect between what nonprofit executives and L3C promoters expect and describe and what lawyers and regulators understand.
So if you’re considering investment in an L3C, be the aware buyer of whom you’ve heard.
Tags:501c3, charity, Executive Director, foundations, Fundraising, IRS, L3C, low profit limited liability corporation, nonprofit, nonprofits, not for profit, philanthrocapitalism, philanthropy, program related investments, Relations with funders, social capital, social entrepreneurship
Posted in Coverage of nonprofits, Current Affairs, Earned income, Executive Directors, Finances, Foundation Hall of Shame/Stupid Foundation Tricks, Fundraising, Investment, Nonprofit management, Nonprofits--General, Philanthropy and Taxation, Private Philanthropy, Relations with funders, Social enterprise | 8 Comments »
January 26, 2011
The indispensable Nonprofit Finance Fund has just begun its annual survey of the sector for 2011. The Fund’s slicing and dicing of the data will produce a thoughtful report on the state of the sector, of the kind it has already provided for 2009 and 2010. Please help the Fund’s researchers help us: take 15 or 20 minutes and respond to their questions.
Speaking of indispensable, the Fund’s founding Executive Director Clara Miller has just announced that she’s moving on to a job with the FB Heron Foundation. No doubt she’ll continue to be a leader in her new position, but her tenacity and vision in creating financial systems for nonprofits (including the Community Development Finance Institution, of which the Fund itself became a leading example) and her no-nonsense discussions of what the sector needs and what it lacks will be sorely missed.
We all owe Clara Miller a debt of gratitude. Maybe the Nonprofit Finance Fund’s expertise can help us figure out how to repay it!
Tags:501c3, CDFI, charity, Community Development Finance Institution, nonprofit, nonprofit financing, nonprofits, not for profit, philanthropy, social capital
Posted in Current Affairs, Finances, Investment, Nonprofits--General, Private Philanthropy | Leave a Comment »
December 13, 2010
The Nonprofiteer first learned of the work of catchafire.org several months ago through our mutual colleagues at Mission Research. She’s been getting around to writing about Catchafire’s work placing high-skill volunteers at New York nonprofits. Now that founder Rachael Chong has been interviewed on NPR’s Marketplace, the Nonprofiteer realizes that time waits for no blogger.
Rachael describes her organization as “Match.com for volunteers and nonprofits.” A nonprofit pays a low fee to have Catchafire figure out its needs (“scope its projects,” in site jargon) and find a volunteer with the right skills to accomplish the task. (At the moment the group operates only in New York, which mysteriously has one of the lowest volunteering rates in the country, but it hopes to expand to other communities in fairly short order.) Volunteer in, do project, volunteer out, bada-bing, bada-boom—the whole thing happens in a New York minute.
The Nonprofiteer applauds Catchafire’s mission and part of its approach–the part about helping nonprofits figure out what they can actually do with high-skill volunteers other than asking them to stuff envelopes. But for every volunteer who wants to root, shoot and leave she knows two who are looking for a long-term volunteer home, and though obviously a Catchafire volunteer isn’t precluded from becoming a permanent volunteer, s/he comes in branded as a person who will, and therefore probably only can, do one thing.
The Nonprofiteer is also concerned about sending a single volunteer to do a project, even if it seems apparent that a single pair of hands is all that’s required. Many people volunteer to alleviate their loneliness (or, more positively, to connect with others) and a single-person project—even in the midst of an agency with lots of people—is likely to be isolated, and isolating.
The Taproot Foundation, which likewise uses a project-based model of providing assistance to nonprofits, addresses the isolation concern by assembling a team to complete each project. The good news is, each volunteer gets to know and work with other high-skill volunteers. The bad news is, teams of volunteers are to nonprofits as hairballs are to cats: tolerable on a temporary basis but unlikely to be integrated permanently into the system. High-skill volunteers searching for a cause about which to stay passionate and a home in which to express that passion instead find the opportunity to be coughed up.
The Nonprofiteer’s theory is that both groups are treating the symptom [failure to use high-skill volunteers] rather than the cause [staff hostility to the use of volunteers]. It may be that only the symptom can be treated; but in her own practice, the Nonprofiteer works to help organizations identify and overcome the sources of staff resistance, so they can make use of high-skill volunteers on an extensive and long-term basis rather than a restricted and short-term one. We all know that staff turnover is expensive because every new person has to be trained; the same must be true of volunteer turnover, and therefore solutions requiring constant orientation of new people create problems of their own.
But may the best model win! And if nonprofits use some high-skill volunteers better as a result of any of these approaches, we’ll all win.
Tags:501c3, charity, human resources, Marketing, nonprofit, nonprofits, not for profit, personnel, social capital, volunteer, volunteering, volunteers
Posted in Coverage of nonprofits, Current Affairs, Management Advice Day tip, Mission, Nonprofit management, Nonprofits--General, Personnel Issues, Volunteers/Volunteerism, Women's Issues | 4 Comments »
December 8, 2010
H/t the indispensable Nonprofit Quarterly‘s Nonprofit Newswire: a congregation in Anchorage is running a “Mitzvah Mall,” at which what’s for sale is donations to nonprofits. A Festival of Light indeed!
And h/t the equally indispensable You’ve Cott Mail, a clipping service about arts and arts management: United States Artists has created a Website to allow patronage of individual artists by individual donors, without the embarrassment of face-to-face requests or the notion that you have to be a Medici to support artists.
What an elegant and lovely idea for the season—individual philanthropy, organized collectively.
Tags:501c3, arts groups, charity, charity promotion, donors, Fundraising, grantmaking, grants, nonprofit, nonprofits, not for profit, philanthropy, Relations with funders, social capital, theater
Posted in Arts Organizations, Coverage of nonprofits, Fundraising, Nonprofit management, Nonprofits--General, Private Philanthropy, Relations with funders | Leave a Comment »
November 17, 2010
A new study—poignantly titled “Social Enterprise: Innovation or Mission Distraction?”—reports that nonprofit agencies which choose to support themselves with for-profit businesses end up serving their clients less and worse. Moreover, when the businesses thrive the profits go back into the business, while when the businesses falter the losses are taken out of the hide of the agencies. (So glad to see nonprofits acting like businesses! This “heads I win, tails you lose” approach is just what the investment bankers did—en route to destroying the economy.)
Gloating is unattractive, and unwarranted. After all, any friend of the nonprofit sector would be delighted to learn there was a way to strengthen it without having to stretch every penny into a copper wire, or grovel to wealthy people who understand the situation less well than the people they may or may not deign to help. But a bit of schadenfreude directed at the prophets of social enterprise really can’t be avoided.
It’s always seemed obvious to the Nonprofiteer that if there were money to be made in ending poverty, poverty would long since have been ended. The challenge is to provide services and alleviate suffering when it isn’t profitable. It seems equally obvious that any system which must allow for a private person to make money before the clients get served is one that reduces the resources available for those clients.
Now, lots of things that are obvious also happen to be false. And certainly there’s a reasonable discussion to be had about whether, once you factor in all the costs of raising donations, it would be cheaper or more efficient—even with a profit margin—to organize charities as business enterprises. But a decade’s worth of experimentation suggests that the answer is “No.”
Are services provided by social entrepreneurs better than no services at all? Sure, but it demonstrates the poverty of our current mindless anti-tax political discourse that those seem like the only two choices. The real alternative to entrusting the provision of public services to for-profit groups is having them supplied by the public. Anyone familiar with the history of the private subway franchises and private lending libraries and private schools of the 19th Century will be grateful that our predecessors decided to eliminate the middleman markup and run subways and libraries and schools as the public goods they are.
Have social enterprises ever succeeded? Certainly, and more power to them. But anyone who claims they will supplant philanthropy, charity or social change movements is selling snake-oil.
The most thoroughgoing enthusiasts of the market seem to forget that Adam Smith himself recognized areas in which it would, and did, fail. Those of us caring for people who can’t make profits for other people are dealing with the consequences of those failures. So let’s face it: we’re outside the market economy. Let’s stop contorting ourselves to fit into it, and concentrate on figuring out how to make our own systems function more fairly, transparently and effectively.
Tags:501c3, Fundraising, nonprofit, nonprofits, not for profit, philanthrocapitalism, philanthropy, Poverty, recession, social capital, social enterprise, social entrepreneurs, social entrepreneurship, social services
Posted in Coverage of nonprofits, Current Affairs, Earned income, Fundraising, Investment, Mission, Nonprofit management, Nonprofits--General, Poverty, Private Philanthropy, Social enterprise | 10 Comments »
April 18, 2010
The Nonprofiteer was talking to a friend who had just scored an amazing venue for the fundraiser of which she is chair: a church close to all forms of public transportation and parking, with a youth group willing and able to provide valet and food service and an adult auxiliary willing to take responsibility for the building so her agency doesn’t have to pay for a security guard. A wonderful welcoming space for free–isn’t that what every nonprofit wants?
Whereupon we realized how much time we and all the other nonprofit professionals we know spend trying to find exactly that: a free place to hold the meetings of our tiny all-volunteer association, or to hold the public forum sponsored by our small civic group, or to conduct the fundraiser for our grassroots coalition. Wouldn’t it be great, my friend suggested, if all the nonprofits in our area (Chicago, but the same would be true for any metroplex) pooled our knowledge about who will share space for free under what circumstances?
If we had a venue registry, we could save endless time–and what is time in nonprofits but the only resource we have with which to secure money? Anything which saves one saves the other, for as it is written “A rental fee saved is a grant earned.”
Surely someone with more social-networking capability than the Nonprofiteer could figure out how to set such a thing up (isn’t this the very definition of a wiki?). Or is there one already in Chicago and the Nonprofiteer just isn’t in the (you should pardon the expression) loop?
Thoughts on how other people approach this chronic issue welcomed!
Tags:charity, charity promotion, Chicago, Fundraising, nonprofit, nonprofits, not for profit, Real Estate, social capital
Posted in Benefit events, Fundraising, Nonprofit management, Nonprofits--General, Real Estate, Technology | 6 Comments »
April 8, 2010
What are high-skill volunteers good for?
- None of us sits in our strategic planning sessions and says, we want to stuff more envelopes, but that’s what we give our volunteers to do–instead of using them on major projects.
- Many organizations are used to giving high-level work to interns and trainees and law clerks; why is it harder to do that with adults? Because/but–
- Volunteer coordinator has a hammer so everyone looks like a nail–whereas interns are assigned directly to substantive staff. The coordinator’s job is often defined as “find volunteers to accomplish these menial tasks none of us want to do” and/or “keep the volunteers out of our hair.” It needs redefining to recognize she’s the gateway to your most valuable resource.
- Instead use them for projects for which you’re understaffed: if you need a part-time coordinator of major gifts solicitations, use a volunteer; if you need more marketing outreach, use a volunteer; etc. Note: do NOT use volunteers for grant-writing except in exceptional cases, e.g. an experienced grant-writer and/or foundation program officer is your volunteer. Explain clearly to the mere writers among your volunteers that, no matter how skilled they are at writing, grant-writing is more a matter of button-pushing and buzzphrase-using, and their skills actually disqualify them from doing it well!
How to identify major projects:
- Essential: to identify discrete projects on which volunteers can work. If you have a strategic plan, take a look at what needs doing under it but isn’t getting done. Particularly suitable for relatively small groups of volunteers, pairs or individuals: research. If your strategic plan says, “Find new space,” send volunteers out to case the neighborhood, establish prices, do your capital campaign feasibility study. If it says, “Expand into day-care,” send your volunteers to talk to other day-care centers about what they charge, their costs and cashflow; and so on. One of the most satisfactory volunteer experiences I ever had was at the Lakeview YMCA, where the Exec Dir looked at my resume and offered me a project directly relevant to my expertise: “Oh, you’ve been a real-estate lawyer; we’re trying to figure out why our residence isn’t filled.” I did the research, reported to the Board, and they 1) acted on it and 2) put me on the Board. This is a hole in one in the world of high-skills volunteering.
- Important: to identify projects on which high-skill volunteers can work independently–independently from you, that is. The reason so many of us end up assigning busywork to volunteers is that we don’t know how to integrate someone who hired herself into our day-to-day work. That’s not because “They might leave” or “it’s confidential” or any of the other excuses we give: it’s because we’ve organized ourselves to get our day-to-day work done, and we don’t want to risk having it taken away from us by a volunteer and thus losing our jobs.
- High-skill volunteers are pretty indigestible in most ongoing projects precisely because they’re not interns or trainees or law clerks–they’re people with significant experience and leadership ability. So the best way to deploy them is to give them an opportunity to lead. This, by the way, is why the long-term “Ladies who lunch” model worked so well: the volunteers were told, “Plan the annual event” and off they went. It was up to them if it took 2 minutes or 2 hours to decide on the color of the tablecloths, and it was up to them to break the larger project into constituent parts and assign them around. Doubtless you already use largely-unsupervised volunteers for your annual benefit event, though if you think of it they’re not necessarily better qualified to choose table arrangements than to assess spreadsheets. So come up with those discrete projects.
How to integrate volunteers into those projects
- Obviously, not everyone can be a leader; but if you find a volunteer leader–and this requires reading his/her resume, taking seriously the experiences shown thereon, and talking to the person to assure yourself of his/her abilities–the best thing to say is, “We need someone to create ____; can you take that on for us?” Then let the person write plans, recruit other volunteers, set schedules, solve problems; and have either the volunteer coordinator or the substantive area leader supervise the leader, rather than the whole cadre.
- The reason so many volunteers are turned away is that no organization has extra supervisory capacity, and volunteers require supervising–so let one supervise others, and then instead of having 30 people to manage you’ll have one. [This is the theory of the Taproot Foundation model, where an “account manager” assembles a team of volunteer professionals to do a project previously identified by the nonprofit. The account manager’s ass is on the line to produce, and that requires figuring out how to herd the cats she’s dealt herself. Sorry about mixed metaphors!]
- The leader, of course, will be happy because s/he’s got The Big MAC –
- Meaningful work;
- Autonomy; and
- Collegiality/community
- His/her followers will be happy because things a volunteer won’t hear from a staff member (“This is all we’ve got for you to do”) s/he’ll hear from a fellow volunteer–and also, a fellow volunteer is more likely to be able to break off chunks of responsibility and hand them to other volunteers, precisely because s/he isn’t a full-time staff member with turf to protect.
Tags:human resources, nonprofit, nonprofits, not for profit, personnel, social capital, strategic planning, volunteer, volunteering, volunteers
Posted in Benefit events, Management Advice Day tip, Mission, Nonprofit management, Nonprofits--General, Personnel Issues, Strategic Planning (and the tactical kind, too), Volunteers/Volunteerism | 9 Comments »
March 26, 2010
The Nonprofiteer is preparing her April 6 presentation at Chicago’s Axelson Center for Nonprofit Management, the euphoniously-titled “They’re Not a Frill if You’re Using Them Right: How to Save Money and Get More Done Using High-Skill Volunteers.”
It should be simple: skilled and experienced people walk into nonprofits; nonprofits use them for their skills and experience. But everyone in the sector knows that it rarely works that way, unless there happens to be a space for the person on the Board of Directors. When there isn’t, lawyers and accountants find themselves stuffing envelopes, and soon nonprofits find themselves with ex-volunteers. And in nonprofits as elsewhere, someone who’s happy with an experience tells one person; someone who’s unhappy tells ten. So why do we keep creating unhappiness and misusing this resource?
Because she’s hopelessly addicted to acronyms, the Nonprofiteer has come up with the Big MAC approach for deploying high-skill volunteers; and if you want to know what that is, as we used to say at the end of our grammar-school book reports, “You’ll have to read the book”–or, in this case, come to the program.
So come spend a morning (9 a.m. to noon) with the Nonprofiteer at the Axelson Center at North Park College; there’s still time to register at northpark.edu/axelson. See you there!
Tags:charity promotion, human resources, nonprofit, nonprofits, not for profit, social capital, volunteer, volunteering, women, Women's Issues
Posted in Executive Directors, Management Advice Day tip, Mission, Nonprofit management, Nonprofits--General, Personnel Issues, Private Philanthropy, Relations with funders, Social Service Agencies, Volunteers/Volunteerism | 2 Comments »
December 9, 2008
Every day brings another idea for the new Administration–today, a group of ex-Secretaries of State and Defense suggested creating an office against genocide in the White House, certainly a creditable idea but not necessarily more entitled to immediate attention than the notion that President Obama should endorse the use of Esperanto. Still, rather than be left out of this season’s most fashionable parlor game, the Nonprofiteer offers her version of How Everything Would Be Much Better If People Would Only Run The Government My Way.
Here’s the idea:
This country’s most important work is done by amateurs–which is another way of saying that we have nonprofits, governed by volunteers, provide most of our social services, education, arts, and health care. If we’re going to continue to do this (and there are good social-capital reasons why we should), let’s give those amateurs the same tools the Small Business Administration gives entrepreneurs, namely expert advice and access to money.
Creating a Nonprofit Business Administration would be a very low-cost way to capitalize on the spirit of service and volunteerism the President-elect created through his campaign and evokes repeatedly in his speeches. Volunteer effort is too valuable a resource to be wasted, as it is every time a nonprofit board has to reinvent the fundraising wheel. And the work of charities is too important to be stymied by a financial system which won’t give them access to working capital unless they beg for it–and sometimes not even then.
The Aspen Institute, a leading think tank on issues related to charity, recommended creation of such an agency back in June, an idea which the Nonprofiteer dutifully reported as though she hadn’t had it herself in 1992.
Tags:nonprofit access to capital, Nonprofit Business Administration, social capital, third sector
Posted in Current Affairs, Investment, Nonprofit management, Nonprofits--General, Public private partnerships | 3 Comments »