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New Generation of Philanthropists

© Ask the Fundraiser.com 2006

A new generation of givers are not only affluent and passionate about the causes they support, they're also eager to donate their time and skills as well as their money. And nowhere is that hands-on approach to philanthropy more evident, the Boston Business Journal reports, than in Boston, where innovation and entrepreneurial ingenuity thrive.

According to experts in the field, more people at a younger age with more money and energy to invest are looking for meaning in their lives. "People are looking around," says John Simon, co-founder and managing director at Cambridge-based General Catalyst Partners and chairman of the nonprofit GreenLight Fund, which funds nonprofit organizations working to address civic questions. "They are looking to do something with their time and money. The question is, what?" Increasingly, according to Simon, the answer is, doing good.

Their timing couldn't be better. As round after round of corporate mergers and acquisitions undermine the reliability of corporations as a source of philanthropic dollars, wealthy individuals, many from the venture-capital world, are becoming increasingly important to nonprofit organizations as a source of both money and know-how.

But this new breed of philanthropist isn't content to write checks at the end of the year; they tend to be focused in their giving, and they often want a clear picture of how their time, skills, and passion can create the greatest impact. "It's not just writing a check and hoping something good happens," said Paul Grogan, president of the Boston Foundation. It's about asking, "Is there going to be a return on investment, and how will I know?"

Kooker, Naomi. “Charity's New, Focused Breed of Donor.” Boston Business Journal 1/15/06.

Corporate Contributions Up - According to Conference Board

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Total corporate contributions in the U.S. and abroad (among 189 corporations and foundations) amounted to $7.8 billion in 2004, The Conference Board reports today in its annual survey of corporate giving to worthy causes. The Conference Board study compared 133 corporations and foundations between 2003 and 2004. U.S. contributions to worthy causes have increased by 22% among the country’s largest corporations and foundations.

Seventy percent of the 189 survey participants (133 companies and corporate foundations) participated in both the 2003 and 2004 editions of the study. These matched cases, representing 57% and 70% of the survey participants in 2003 and 2004, provide the most accurate analysis of year-to-year trends in U.S. giving. Total U.S. giving in 2004 among the matched sample was $5.5 billion.

In the matched sample, median U.S. contributions by companies and corporate foundations increased 4.57% from $8.1 million in 2003 to $8.47 million in 2004.

In addition, total U.S. giving from 189 of the largest companies and corporate foundations surveyed by The Conference Board amounted to $6.29 billion in 2004, while total international giving among this group amounted to $1.45 billion. This represents 65.8% of the overall estimated $12 billion in corporate charitable U.S. and international giving in 2004.

Corporate U.S. giving ranged from a low of $12,000 to a high of $887.6 million, with median U.S. contributions at $7.6 million compared to $4.6 million in 2003, an increase of 65.2%.

Health and Human Services Top Recipient

Support for health and human services maintained its position as a top priority in U.S. corporate contributions by garnering approximately 54% of the U.S. contributions, compared to the 17% earmarked for education, which ranked second.

“Strategic philanthropy continues to lead corporations to align their contributions programs more closely with their business missions,” says Sophia Muirhead, Senior Research Associate at The Conference Board and author of the report. “For the fifth consecutive year, the allocation of U.S. corporate contributions to both health and human services and education each exceeded $1 billion.”

Among matched-case respondents, there was a significant increase in giving to health and human services (72.48%) and civic and community (21.96%), and a slight increase in giving to culture and arts (1.51%). There was a slight decline in giving to education and the environment.

International Contributions Also Rising

Sixty-two matched cases, representing 62% and 70% of the survey participants reporting international contributions in 2003 and 2004, respectively, provide the most accurate analysis of year-to-year trends in international giving.

The matched cases indicate that international corporate giving among the largest contributors is on the rise. Their total giving increased by 35.6% from 2003 to 2004. Among these matched cases, median contributions increased 2.92%, from $1.52 million in 2003 to $1.57 million in 2004. Most of the international budget consisted of non-cash donations from headquarters.

The survey also reports:

According to 141 respondents, their 2004 and 2005 giving to tsunami relief efforts totaled $260 million. Most corporate giving to tsunami victims occurred in the first two months of 2005 and was in the form of cash donations (63%). Among manufacturing companies, the trend was to donate non-cash (46%), while the preference among service companies was to donate company direct cash (60%). Fifty-nine percent of those giving to tsunami relief efforts reported that their giving was in addition to a preexisting general giving budget, and 19% reported a reallocation from a preexisting budget.

Approximately 78% of survey participants reported having corporate foundations through which they make charitable contributions. Total foundation cash giving (payout) amounted to $1.11 billion in 2004
Among the 147 surveyed companies that maintain corporate foundations, 57.14% made gifts to their foundations in 2004, up from 53.2% in 2003. Gifts into foundations from their parent companies (pay-in) totaled $1.45 billion.

The Conference Board’s 2004 survey of corporate contributions was conducted via e-mail and U.S. postal mail between February and July 2005.

For further information contact:
Sophia A. Muirhead
(1) 212 339 0373
sophia.muirhead@conference-board.org

What is a Conflict of Interest?

© Ask the Fundraiser.com 2006

Courtesy of BoardSource.com

What is a conflict of interest?

Conflict of interest is difficult to define, yet many people think they know it when they see it. The legal definition of conflict of interest, usually set out in state laws governing nonprofit corporations, is very specific and covers relatively few situations. Most conflicts fall into a gray area where ethics and public perception are more relevant than statutes or precedents.

Conflict of interest arises whenever the personal or professional interests of a board member are potentially at odds with the best interests of the nonprofit. Such conflicts are common: A board member performs professional services for an organization, or proposes that a relative or friend be considered for a staff position. Such transactions are perfectly acceptable if they benefit the organization and if the board made the decisions in an objective and informed manner. Even if they do not meet these standards, such transactions are usually not illegal. They are, however, vulnerable to legal challenges and public misunderstanding.

Loss of public confidence and a damaged reputation are the most likely results of a poorly managed conflict of interest. Because public confidence is important to most nonprofits, boards should take steps to avoid even the appearance of impropriety. These steps may include:

Adopting a conflict-of-interest policy that prohibits or limits business transactions with board members and requires board members to disclose potential conflicts. Disclosing conflicts when they occur so that board members who are voting on a decision are aware that another member’s interests are being affected.

Requiring board members to withdraw from decisions that present a potential conflict. Establishing procedures, such as competitive bids, that ensure that the organization is receiving fair value in the transaction.

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Nonprofits Should Vet Volunteers

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Nonprofit groups that don't run background checks on volunteers may find themselves vulnerable to theft and abuse, not to mention negative publicity resulting from the actions of unscrupulous individuals, the San Diego Union-Tribune reports. Last month, for example, a Red Cross volunteer in Dallas was charged with stealing debit cards the charity had earmarked for victims of Hurricane Katrina, while, earlier in the year, a volunteer at a children's cancer foundation in Denver was accused of embezzling $12,000 from the organization and volunteers at the San Diego Food Bank were accused of walking off with bags of donations for their own use.

These and other cases nationwide are drawing increasing attention to a growing problem confronting the charities: vetting volunteers. With an estimated 84 million adults in the United States volunteering some 15 billion hours a year, many organizations are understandably reluctant to invest the time, money, and resources necessary to do background checks. "Unfortunately, the criminal element will target nonprofit organizations, even outside of natural disasters, knowing they don't have the same level of safeguards and internal controls that a business would have," said Daniel Borochoff, president of the Chicago-based American Institute of Philanthropy.

Moreover, the potential for abuse has been growing, as nonprofits are increasingly called upon to deliver social services, disaster relief, and other critical programs, with much of the work performed by volunteers. In the case of the Red Cross, which has a nationwide policy of ordering background checks on volunteers, such safeguards were not enough to prevent the alleged theft of hundreds of thousands of dollars in hurricane relief funds by temporary call-center staff hired through a Florida-based subcontractor. Spherion, the company that provided the temporary staff, said it works with every client to draw up employee-screening standards for a specific job, but "given the special circumstances and urgent need, all background checks could not be conducted." AIP's Borochoff said a certain amount of theft and abuse is inevitable when charities are responsible for distributing so much money on such short notice. "The charities are in a difficult balancing act," he added. "The public needs to understand there's going to be some waste."

McDonald, Jeff. “Nonprofits Find It Hard to Vet Their Volunteers.”
San Diego Union-Tribune 1/01/06.

Indiana Attorney General Sues Olin B. and Desta Schwab Foundation

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Indiana Attorney General Steve Carter is suing the Olin B. and Desta Schwab Foundation, alleging that it was moved illegally from Fort Wayne to Nevada to escape scrutiny by state regulator, the Fort Wayne Journal Gazette reports.

The Schwab Foundation was created in 1989 by Olin Schwab to help area students choose careers. In the past few years, however, the foundation's board dwindled to just three members — including Richard H. Blaich and Jon Garver, defendants in the AG's suit — paid staff was fired, and the foundation was moved to Nevada. An August investigation into the foundation's operations found that a growing number of grants were made to out-of-state schools and that the foundation had paid for a luxury house in a gated community in Lake Las Vegas and picked up nearly $90,000 in board members' travel expenses and vehicle leases.

Carter's office is seeking to freeze the foundation's assets and remove its board members. The suit contends that the board acted illegally in 2003 when it dissolved the Fort Wayne-based foundation and merged it into a Nevada foundation with the same name and board members. After the merger was completed, all the assets of the Indiana foundation became the property of the new Nevada foundation, including the home. In addition to Blaich and Garver, the suit names former board members John Dortch and Charles Conville, as well as Asset Funds LLC, the Delaware corporation used to buy the house, as defendants.

"We certainly view these expenses as questionable and continue to investigate them," said Carter, stressing that his biggest concern is the $1.5 million house. "The public trust in this institution has been betrayed."

Stockman, Dan. “State Sues Schwab Foundation.” Fort Wayne Journal Gazette 12/29/05.