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Magazines > Searcher > February 2007
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Vol. 15 No. 2 — February 2007
Philanthropy Not Just for Rock Stars: "Real People" and Digital Donations
by Cecilia Hogan
Director, University Relations Research, University of Puget Sound

Click here for a collection of links mentioned in this article.Grab your camera and autograph pen. There’s a new rock star in town and it’s philanthropy. That’s philanthropy with a capital “PH” now that Bill Gates and Warren Buffett are the latest duo with a chart-breaking hit. The two richest men in the world joined forces to remix philanthropy in mid-2006. Buffett announced his plan to turn over about $31 billion of his Berkshire Hathaway fortune to the Gates Foundation to oversee and distribute.

This was the same Warren Buffet who previously proclaimed his plan to make his best philanthropic gifts from the other side of the Great Divide. This was the same Bill Gates who told the world in the mid-1990s that he wasn’t interested in philanthropy because he was too busy running his company, that he’d get interested in philanthropy when he was in his “declining years” (Corcoran, Elizabeth, “Bill Grows Up,” Forbes, Oct. 10, 2004).

My, but times do change.

Ann Castle, the late founder of a Web resource collecting data about women as philanthropists [http://www.women-philanthropy.umich.edu/index.html], once told a group I was honored to be among, something which I have never forgotten, “All of you who give to nonprofits are philanthropists.” She was right. Every one of us has the power to be a philanthropist. The size of our philanthropic offerings may run a tad less than Gates’ and Buffett’s, but they are philanthropic domains nonetheless.

Caught Unawares

No one is prepared when disasters strike, including philanthropists. Deliberate philanthropists — of whatever size and scope — make their giving plans ahead of time. Each quarter or year they decide which charities they will support. Some philanthropists commit their funds on a specific day each year. One donor tells of sitting down with his wife in an annual holiday celebration to write 20 to 30 checks to their favorite nonprofits, checks totaling more than $200,000. Donors with family foundations might meet only once or twice each year to decide which causes the family will support in the coming 12 months.

So, you can see, funds are committed in advance. When disasters hit, inflexible funds may not respond readily. Our recent history as a nation testifies to that. For most people, access to information about disasters is now dramatic and immediate. The electronic call to join in supporting efforts to help the victims comes in nanoseconds. The phone numbers and Web site URLs appear as ticker tapes rolling across the bottoms of our television screens.

People who never thought of themselves as philanthropists, people who may have little experience as donors, race to their phones and their computers. They’ve bought CDs, books, and concert tickets electronically and now they use that same pathway to buy help for those suffering.

By late January 2005, people with computers had clicked the “donate” button to give more than $350 million to U.S. charities for tsunami relief. Save the Children reported online giving at $89,000 an hour in late December of that year, more than eight times the normal rate for the end of a calendar year (Haji, Shreez, “Tsunami Relief Efforts Show Trends in Online Giving,” ePhilanthropyFoundation.org, Jan. 25, 2005).

The tally for funds received for Hurricane Katrina relief by the American Red Cross alone reached $1.3 billion by late 2005 (Jensen, B. & Schwinn, E., “Donations for Hurricane Relief Exceed $2-Billion, but Costs Soar,” The Chronicle of Philanthropy, Nov. 10, 2005). Some studies put online giving to disasters at one-quarter of all monies received. In our e-history to this point, online donations in normal times accounted for only about 1 percent of all giving to charities (ePHilanthropyFoundation.org).

Fundraisers were awestruck and a little frightened. The outpouring of funds to support disaster relief spoke of the potential for broader support on a consistent basis. It also left many charities wondering if they just lost their best philanthropic friends to other causes.

But here is the most interesting unraveling of this phenomenon. Statisticians concluded that most disaster donors gave in addition to the regular donations. The charities at home were not expected to suffer, they reported (Lampman, Jane, “Robust economy = robust giving,” The Christian Science Monitor, June 20, 2006).

The Dark Side

Anecdotally, small charities reported a different experience. Established small charities in hometowns across the country seemed to lose their appeal in the shadow of the enormity of the loss for tsunami and hurricane victims. Nonprofits scrambled to meet existing program funding requirements and avert cutbacks. People were still homeless in their own cities. Children were still hungry.

There was another rub to come for the charities who received electronic bus loads of new donors. A good nonprofit is obligated by its commitment to its best supporters and its program recipients to continue to identify new potential donors. Costs rise and needs expand, after all. So, the droves of new donors to relief charities looked like a brand-new fan club to those overworked nonprofits. But 50 percent of those new donors asked to not be contacted by the relief agency to which they gave, creating the “opting out” conundrum. The charities lost their chance to cultivate the new donors who might sustain the new programs established to better prepare the nation to help disaster victims (ePhilanthropy.org).

Listen and you can hear the big sigh from the relief charities.

One-half of the donors were forward-thinking enough to get themselves off charity call lists before the phone lines were even connected. Donors wanted a way to give but declined to establish more than a first-kiss relationship with the nonprofits they momentarily supported. The nonprofits became the vehicle for helping the victims and nothing more. That’s clear messaging, isn’t it?

Nonprofits struggled to find a way to approach the new donors who did not decline contact. What would be the most effective way to introduce the new donors to the broad initiatives of a nonprofit known as disaster relief central? That question still remains.

It’s not just climatic disasters that have felt the sea change. Political disasters — or at least, perceived political disasters — have also felt the digital tide. Howard Dean gets the credit for breakthroughs in electronic relationships with supporters. In 11 months in 2003, Dean claimed 500,000 online supporters. It was a first. Those same Web-sters gave Dean’s campaign $7.4 million in the third quarter of 2003. It made online donating history (Cone, Edward, “The Marketing of a President,” Baseline, Nov. 17, 2003). We can imagine that those same folks had no trouble going online to read about and give to agencies offering to help tsunami and hurricane victims.

Nonprofits certainly have a new set of problems for the nonprofits. Increasing online donation technology and resources, managing new programs effectively, and paving a path to new supporters top the list.

Making the Philanthropic Charts

In some stories you have to set aside outcomes of the individual players and reflect on the big picture. In 1996, cable magnate Ted Turner suggested that someone ought to create a scale similar to the Forbes 400 rich list, one that would rank philanthropists by the size of their gifts. Slate magazine took up the challenge and did just that. In 1997, Turner pledged $1 billion to the United Nations. He said that he hoped his gift would up the philanthropic ante at the millionaires’ table. When making the gift, Turner said, “You’re not born to give. You’re born selfish” (“Ted Turner donates $1 billion to ‘U.N. causes,’” CNN.com, Sept. 19, 1997).

The collection of top philanthropists was named the Slate 60. (For a history, check out http://www.slate.com/id/2136385/.) Ann Castle was the list doyenne. She researched the biggest givers. All in the business of philanthropy held their collective breath to see if Turner’s megagift and his challenge to his rich peers would make a ripple in the philanthropic wake (Plotz, David, “Competitive Philanthropy,” Slate, Feb. 20, 2006).

What has transpired on the philanthropic front in the near decade since Turner’s challenge? The Slate 60 celebrated 10 years of enumerating the country’s biggest donors with a bit of reflection. The first year, donors who made the list gave at least $10 million and the median gift was $15 million. In 2006, the bottom ledge was $15 million and the median point $32.5 million. In 2005, gifts totaled more than three times those of 1996. Slate didn’t claim credit, pointing out that philanthropists still weren’t scrambling to get on the list of biggest donors. But, as Slate reported, “The rich are getting richer.”

Establishing a foundation became a popular family activity in the 2000s. The number of family foundations grew from 20,498 in 1999 to 31,347 in 2004, a 65 percent increase (“The Foundation Yearbook,” Foundation Center, June 2006).

Philanthropy, we might say, reached rock-star status.

You Ain’t Nothin’ but a Donor

For many years, my favorite philanthropist in the category “male rock stars” was Elvis Presley. His giving was spontaneous and had no link to how he might personally benefit through tax breaks or publicity. He gave from the heart in the purest sense — joyful, spontaneous giving. Elvis gave away Cadillacs. He gave them randomly to people who he thought would like one or need one.

Once I began to understand the intricacies of philanthropy, I realized that Elvis was exhibiting behavior typical of people who have little experience with philanthropy. He was a philanthropic novice. Like all of us, no matter what the size of our bank accounts or stock portfolios, Elvis had the power to be better organized and more clearly directed in his philanthropic choices. Like other aspects of his life, Elvis was receiving little guidance about how to be an effective philanthropist.

Effective philanthropy is easier than you think. You may not have noticed how many lessons in philanthropy are close at hand. A few deeply personal things you will have to figure out on your own. There are no experts on the personal part of philanthropy, but perhaps a few stories can help you get to where you ought to be.

Not long ago a colleague phoned to tell me the story of a philanthropist-to-be whose path had crossed ours in different ways. I encountered this man’s philanthropic story when it had yet to begin. I could envision his opportunities to give but, when my fundraising team met with him, he said that he was not ready to be a big donor. He didn’t think of himself as wealthy, but as a hard-working businessman.

Not too many years passed. Before he realized it, he was sitting on corporate and nonprofit boards with people who told stories about their own megagifts to their favorite charities. He told himself, “Here I am, with them. They are my peers.” One year, he had to write a check for millions for taxes. He later said that at that moment, he decided to get serious about philanthropy. He turned to the nonprofit that had most recently offered him a leadership role, a solid nonprofit with which he had a deep experiential attachment, and asked its staff to help him learn how to be a philanthropist.

For many people, coming to the general topic of their philanthropy is easy. Either they or someone close to them used the services of a nonprofit and experienced a meaningful outcome, even a life-changing one. Hospitals and colleges find their best supporters in this group.

For others, a “big picture” approach to philanthropy inspires them. They look at the world and think about how its problems might best be solved. Will education solve the problems? Can the fine arts help us retain our history as a people, continuing to call us to operate from a better place?

Still others find themselves most deeply moved by the basics of life that remain unsolved for people in our own country and across the world. A belief in the right to adequate housing, food, and healthcare for each human being delivers them to their philanthropies.

Before the Gift Comes the Giver

The size of the gift doesn’t matter in this part of your philanthropic story, but the impact of your gift and your opportunity to see the impact may matter. When you choose philanthropies close to home, you are more likely to clearly see the outcomes of the gifts made by you and others. You will hear about the program improvements through communications from the nonprofit. You may even read about them in the newspaper. You will drive by the freshly remodeled buildings and see the program participants going in and out. You will shop or work with the recipients of your gifts.

If you are a volunteer for that nonprofit, you will get an even sharper picture of the funds needed and the funds used. A hands-on involvement in a nonprofit has become the approach of choice for many donors, particularly baby boomer and younger donors. Social Venture Partners [http://www.svpi.org], a participatory grantmaking foundation established in Seattle and now replicated in more than 20 other locations, offers member donors a chance to join committees that closely review applicants for support. In that exposure, many donor participants learn about charities they wish to volunteer for or support on their own.

Some months ago, an acquaintance at work asked my husband to join him in a volunteer project. The Friday Night Feed is held in a parking lot under an elevated highway in our town. Volunteers from area churches arrive at 7 p.m. with pick-ups full of clothes, blankets, and food. Each volunteer group is distinct, but all complement one another in offering needed help. One group is the Peanut Butter Brigade — they make peanut butter and jelly sandwiches for everyone. The group my husband, Tony, joined makes “stir-fry,” rice cooked in giant woks with fresh broccoli, peppers, onions, and carrots.

Soon the recipients of this good will arrive. In less than 2 hours, the volunteers feed 250 men, women, and children. They are so hungry that they eat standing in line. Tony says that the children are the most beautiful he has ever seen. Tony learned that the stir-fry costs the sponsoring church $160 each week to provide. Wait a minute. That’s what four of us spent eating dinner together in a restaurant last Friday night, isn’t it?

Time to Choose

There are few ways to predict what will motivate or interest a donor. It is a mystery to everyone but the donor. We in fundraising may guess which way a donor’s interests will go, but we never know until the donor begins to give. Years ago, I listened to a panel of philanthropists talk about why they give. A woman in her 50s, well-known for her support of the arts, said, “I don’t know why no one ever asks me to support children’s causes. I love children. But they must think I wouldn’t be interested because I don’t have any children of my own.” See?

In the world of very big donors, the picture can get even cloudier. One friend’s gift to a nonprofit sometimes represents a compensatory gesture stemming from another friend’s gift to another nonprofit. Supporter of the Arts gives to the Shelter X because Supporter of the Homeless gave to Museum Y when asked last year. Tit-for-tat philanthropy, you might say.

Each of us must determine what makes our hearts sing. We must decide on what path we want to take to change the world. If you ever doubt that you are changing the world with your gift, just remember the cost of stir-fry for 250 hungry, homeless people.

Rating Charities

What resources exist to help evaluate philanthropic opportunities, the options you have as a philanthropist? How do you start making magic?

Here are a few of the ways you can evaluate risk and maximize your contentment with your philanthropy. These measures are offered to you in detail. You will have to determine the value of the measures for yourself.

Charity Navigator
http://www.charitynavigator.org/

Charity Navigator bills itself as “your guide to intelligent giving” and has developed a rating system that involves several measures. It begins by rating charities on factors of “organizational efficiency”: program, administrative, and fundraising expenses, and fundraising efficiency. The Web site coaches users that “higher is better” when it comes to percent of total expenses spent on programs and services. That means the money is getting to the people the nonprofit serves. It tells visitors that “lower is better” when it comes to the percentage of total expenses spent on administrative and fundraising. The amount spent to raise $1 is the measure of fundraising efficiency.

The ratings given for these four factors are combined to create an overall efficiency rating expressed as a range of zero to four stars. Are you still with me? There’s more.

Charity Navigator rates nonprofits on three factors defined as organizational capacity. The question now is, “How well is this charity positioned to sustain its programs?” The measures are primary revenue growth, program expense growth, and the working capital ratio. The last one predicts how long the charity could sustain its current level of spending using only net liquid assets. In other words, charities that are top-heavy with endowment rank lower than those keeping what is deemed a reasonable asset profile.

From these measures, each charity gets a capacity rating and, ultimately, an overall rating. At this point, you might think of this rating system as one designed for the deeply suspicious. In its condensed and concluded format, it is an easy way to compare charities if these measurables are the ones you hold most dear.

American Institute of Philanthropy
http://www.charitywatch.org/

The American Institute of Philanthropy rates 500 national charities three times each year. The top-rated charities are organized in categories such as homelessness, women’s rights, and human services.

The Institute’s rating system differs from that devised by Charity Navigator. It has only three measurables. The first is the “percent spent on purpose.” The Institute’s threshold for “good” is 60 percent or more spent on purpose (programs and services). A caveat recognizes that some nonprofits have greater — and valid — expenses for direct mail and telemarketing.

The second measurable is the cost to raise $100, with a threshold of $35 or less deemed as good. The clarifying point here is that this measure is one of fundraising expense to funds raised, not to total income. When total income is used as the comparable by other raters, the fundraising expense appears as a smaller portion of expenses. You have to decide which seems more accurate.

The third measure is the number of years of available assets. Contrary to your own budget at home, the Institute frowns on reserves of more than 3 years. It considers that “groups with available assets of more than five years are the least needy” and gives such nonprofits a grade of “F,” no matter what their performance in other factors.

I bet that surprised you. As you can see, the Institute places a higher value on nonprofits that give away their resources than those with a conservative approach to asset-spending. This measurable may speak to the stability of a nonprofit in the long run. If you believe in saving a penny for a rainy day, you might not like this component of the Institute’s grading system.

The Institute also provides a compensation chart for highest-paid nonprofit executives. We walk on tremulous ground here, since there are conflicting ideas about the pay for nonprofit executives (and executives in general). Should nonprofit executives be paid like members of the clergy or others in a traditional vocation of service? Can multimillion-dollar organizations expect to attract able leaders when they don’t offer competitive salaries? Is the efficient use of donor dollars linked to executive compensation? Does a low salary predict a better use of a nonprofit’s funds across the board? These are questions whose answers can reverberate deeply in the heart of each donor.

The top-rated nonprofits and their single grade (A through F) are available online for free, but full rating profiles from the Institute cost. Receive a sample copy of the Charity Rating Guide & Watchdog Report for $3. Donate $40 or more and you become an Institute member and begin receiving rating lists.

Give.org
http://www.give.org/

Give.org was established in 2001 through a merger of the National Charities Information Bureau and the Council of Better Business Bureaus’ Foundation. This rating provider urges visitors to its Web site to “investigate before you give.”

It covers national charities from the information these charities provide and does not rate nonrespondents. The information returned is used to determine if each nonprofit meets Give.org’s Standards for Charity Accountability. Ratings include factors of governance, expenditure accountability, truthfulness in representations, and approach to public information disclosure.

One unique feature permits users to forward an anonymous complaint to a charity. Complaints that involve violations of the Standards are reviewed by Give.org.

Ratings are based on the use of funds for programs, fundraising, and administration as a percentage of total expenses. Each review has an expiration date and an easy-to-read pie chart outlining the expense percentage for each measurable. The charity review also includes a detailed financial profile.

Do things seem a little simpler with this rater? No grades and a lot more reading for you, the potential donor. It’s up to you to determine if that is easier to manage.

Do Your Own Evaluations

Some resources offer users the chance to make conclusions on their own, reviewing the points of information at the source. For example, U.S. nonprofits are required by the government to make information on their charitable activities available to the public. Think of nonprofits as the public companies of the philanthropic world. Since nonprofits operate with “investors” (aka donors), they must let those interested review their performance, just like public companies do through U.S. Securities and Exchange Commission documents. For nonprofits, the sunshine document is a tax form called a 990-PF.

The independent evaluator can try these resources.

Independent Sector
http://www.independentsector.org

Independent Sector has organized nearly 100 standards and codes for nonprofit organizations into a “comprehensive Web-based clearing house.” This resource is called “Accountability: Who’s Doing What” and is billed as a “Compendium of Standards, Codes, and Principles of Nonprofit and Philanthropic Organizations” [http://www.independentsector.org/issues/accountability/standards2.html].

If you’ve thought that charities and their employees do not have standards, you’ll be delighted to review this collection. You can also find more charity raters in the section called “Public Charities.”

National Center for Family Philanthropy (NCFP)
http://www.ncfp.org

Perhaps you have heard about the impending transfer of wealth from the Greatest Generation to the baby boomers (Boston College Center on Wealth and Philanthropy; http://www.bc.edu/research/swri). Some estimates have more than $40 trillion moving from one generation to the next before we reach the year 2050. The NCFP has the lofty goal of supporting the general transfer of philanthropy across generations. The organization helps families define their goals, educates them about philanthropic issues, gives them governance and management tools, and cheerleads them through the experience of transforming the lives of others.

This article has already commented on the increase in the number of family foundations in recent years. Families are turning to one another to create an intelligent approach to philanthropy, one based in the wise counsel they have given each other. You may discover that this is the best approach for you and your loved ones in the long run. If you do, there are few better resources than NCFP.

Donor Teamwork

Justgive.org
http://www.justgive.org

Justgive.org wants to make philanthropy a part of everyday life for everyone and, to reach this goal, it links donors to nonprofits. If you’d like to fit your philanthropy into celebratory moments in your life, try this resource. Justgive.org offers gift certificates, a wedding registry, and charity wish lists for visitors.

You say you are a bride or groom who just doesn’t one want one more toaster, towel set, or blender? Look into Justgive.org’s wedding registry, where you can direct your friends and family to support your favorite charities instead. Or replace that usual birthday or holiday gift certificate to the book store or DVD shelf with a nonprofit gift certificate for your loved one.

Are your loved ones quizzing you about what they can give you? Set up a wish list of charities you believe in and then direct gift-givers to Justgive.org. Each transaction (or donation), regardless of size, includes a $5 tax-deductible fee for processing and Justgive.org’s support.

There are plenty of resources for novice philanthropists at this site. You will find tips on giving, ideas about volunteering, and guidance about how much to give. And that’s where the real fun begins. Justgive.org reports that Americans give 3.2 percent of their before-tax income to charities. Then Justgive.org offers you an online giving calculator so you can discover what you ought to give to charity. Ouch. Just enter your income and the calculator helps you set a philanthropic goal.

Network for Good
http://www.networkforgood.org/

Maybe all these ratings leave your head spinning. Maybe you’ve noticed the dearth of talk about local charities. Maybe you’d like to do your own research or draw your own conclusions from information provided. Meet Network for Good.

Network for Good claims to be the Internet’s leading charitable resource. It was founded in 2001 by Time Warner and AOL, Cisco, and Yahoo! and claims that 300,000 donors have passed through its gate.

Network for Good provides links to other giving vehicles and to the Better Business Bureau site. It offers visitors a chance to set up monthly, quarterly, or annual donations to their favorite charities. It has a volunteer link and a giving calculator.

Do you know what cause you’d like to support but don’t know which major charities address that cause? Network for Good has “gift baskets,” collections of nonprofits that fit comfortably into a category together. The Charity for Children basket contains giving to Big Brothers/Big Sisters of America, the Children’s Defense Fund, Save the Children, and other nonprofits. The Aid for Animals basket contains the Humane Society, the Wildlife Conservation Society, and other nonprofits.

You can set the amount each charity in the basket receives and remove a charity by indicating no amount for that entity. “Add to cart” will then take you to an e-card selection and a message about this online donation being made in your recipient’s name. Network for Good has a 3 percent fee for credit card transactions and a $10 fee for check transactions. The fees are deducted before money is distributed to your charities.

For the first time, we meet a list of local charities at Network for Good. Search by city, state, or even ZIP code. Select by charity name or type of cause. Get thousands of results and then grab your temples as your brain freezes. Shake it off and use the “refine search” feature to add more qualifiers, such as area of interest, city, or any keywords. Finally, you have a manageable list of charities you might support.

When you have a list of charities, choose “Research” and you’ll land at a GuideStar profile, which will have no information for the very small nonprofits but some for the larger ones. A profile may include mission, programs, an executive profile, financial data, locations served, and year founded.

Once again, if you get this far, you will have a lot of reading to do. How far you go may relate to how big a donor you plan to be.

Every Picture Tells a Story, Don’t It?

“Don’t forget what you are,” the Byrds sang. “You’re a rock and roll star.” And, like all rock stars, you have already begun to write your philanthropic memoirs. You may not have realized it, but it is true. Can you see the story now?

In the 20th century, the big stories in philanthropy concerned the Carnegies and the Mellons. In the 21st century, it will be the Gateses and Buffetts. Or will it? Maybe the big story will turn out to be stories of philanthropy by people like you and me. Your own philanthropic story is unfolding. Whether it is about online donations, local volunteer work, or national advocacy efforts, your story has the potential to be a page turner. What will happen next? Only you can reveal that. Those around you who need your help are waiting to know.

Rock on, Philanthropists.

Caveat, Donor

In the old days, you gave to a charity because it was the one your parents supported. You gave at church, to the school your children attended, and to the organizations serving your family members. Everyone knew about a handful of national charities. The world of nonprofits was smaller then, of course. In 1987 there were 422,000 nonprofits. By 2005, the number had nearly doubled to a whopping 800,000 (“Fund-raising Competition Increases as U.S. Charities Number 800,000,” Association of Fundraising Professionals, Jan. 24, 2005).

Now you can pick from among the many. It may feel like choosing between 50 shades of yellow when you want to paint the kitchen. You may pine for a simpler range of choices. How will you choose? How can you pick the right one on your own? What if you pick the wrong charities to support? How will you satisfy the little bug in your ear warning that this one might be a rip-off?

Confidence in choosing a charity has eroded in several ways. Some suspicions are unjustifiably attached to the world of charities. For example, scammers have preyed on a poorly educated public with pseudo-charity appeals. Nearly everyone knows someone who was exposed to one or, worse, fell for one. This is the equivalent of unknowingly buying a fake Gucci or Rolex.

Charities themselves inadvertently undermined consumer confidence in the early 2000s. For example, in trying to manage the enormous influx of gifts following the 9/11 tragedy, the American Red Cross made choices that did not follow the wishes of its donors. Don’t doubt for a moment that the public’s reaction put all charities on notice about donor intent, follow-through, and stewardship. You may have heard similar stories in the wake of the unprecedented efforts to help hurricane victims. I hope you will keep in mind how difficult it must be for any entity to strain beneath that gargantuan demand and not buckle a bit.

Finally, some charities are fragile. Young charities are particularly fragile and often represent the cause that has the most immediate tugs on your heartstrings. These groups form up out of the goo of a horrible loss or an immediate problem. These charities can be one passionate and articulate person’s dream for a solution. They are frequently shoe-string operations. Sometimes the age and development stage of a
charity is hard to notice. A charity can seem more mature than it is. Some donors are not afraid to support something that might not work out. Have you paid good money for a ticket to what turned out to be a mediocre concert? That can certainly happen with your philanthropic dollar.

These are the risks that face each donor. There isn’t much in life that is risk-free. We constantly weigh the odds of each risk we take. Philanthropy probably falls low on the scale of true risks, doesn’t it? As soon as we begin to measure the gains, we lose track of the risks.

To-Do List: Worry About Gates and Buffett Heirs

Bill Gates gets well-deserved credit for raising the profile of philanthropy. He did it in Beatles-like fashion: storming the world with the biggest in dollars and the best in causes. The less-than-mega-rich world was stunned to hear Bill and Melinda talk about leaving most of the Microsoft fortune to charities and not to their heirs. People hearing half the story thought the couple would leave their children destitute. News stories played up the disinheriting of the Gates offspring since it is so, well, un-American. Read deeply and you learn that the poor Gates children will receive only multi-millions each.

Warren Buffett is leaving unnamed amounts to each of his children and several billion dollars to their foundations. He has an interesting perspective on what he calls “the meritocracy” that is the American way of life. He believes people should have the grand American chance to earn their wealth. He believes leaving megawealth to one’s heirs is, well, anti-American. He jabs at those who leave their own offspring in a poverty of wealth. Warren says that those estate transferors are leaving “their children a more-than-lifetime-supply of food stamps and are substituting a trust officer for a welfare officer” (The New York Times, June 26, 2006).

So, check this worry off your list. And now that we allayed our concerns for the Gates and Buffett heirs, let’s think about our own approaches to inherited wealth. What? You don’t feel wealthy? Here are two words for you: real estate. If you haven’t done so already, hold your breath and Zillow your home [http://www.zillow.com].

The History of Bill Gates, Philanthropist, in 300 Words or Less

In 1994, Bill Gates was interviewed by Playboy magazine. Unmarried at 38, Bill told Playboy that he did not plan to give his fortune to his yet-to-be-born children. When asked if he would give his children a billion dollars, Bill said no, a tenth of that. When asked what he would do with his fortune, Bill said he planned to give 95 percent of it to charity, but he wasn’t interested in doing that until he was in his 50s (“The Gates Interview,” Playboy, 1994).

But sinew and gray matter were stretching and changing in Bill’s evolution as a donor. He had met Melinda French a few years earlier and, in 1993, bought her an engagement ring. He married Melinda in early 1994. In June 1994, Bill’s mother died at just 64. Mary Maxwell Gates was well-known as a philanthropist in the Northwest. A United Way supporter, she began prodding Bill toward philanthropy when his fledging company had only 30 employees.

In 1996, Bill and his good friend Steve Ballmer named a building at Harvard for their mothers with a $25 million gift. Other gifts remembering Mary Gates followed, primarily to the University of Washington, where she served as regent for almost 20 years.

Mary Gates facilitated the start of Bill’s friendship with Warren Buffett when she urged Bill to attend a picnic she was hosting which Warren planned to attend (The Wall Street Journal, June 10, 2006).

In 2004, not too far from 50, Bill said, “We need to get this new generation drawn into philanthropy.”

P.S. Melinda Gates’ fondest dream is to find a cure for AIDS. Let’s watch what happens next.

My Favorite Philanthropist, Duo or Group Category: Pearl Jam

Pearl Jam oozed up out of the grunge movement in the Northwest. The band began receiving attention for its philanthropy in the 1990s, an eon ago for a rock group. They have donated money from concerts to education, the environment, and other causes. A late 1990s Pearl Jam concert raised more than $500,000 for local nonprofits (Puget Sound Business Journal, Nov. 2, 1998).

One instance of responsible citizenship, model philanthropy for fans, and just way-to-go-guys backslapping drew my attention not long ago. Pearl Jam evaluated the environmental damage done by the vehicles moving the band from city to city on their 2006 tour. They then made a plan to fund a “Carbon Portfolio Strategy” that would give $100,000 to green charities to offset the carbon footprint (or tire track) they would leave. “We emitted about 5,000 pounds of carbon on our last tour,” guitarist Stone Gossard told the Seattle Post-Intelligencer (Rolph, Amy, “Pearl Jam thinks globally, but also gives locally,” Seattle Post-Intelligencer; July 11, 2006).

Now, that rocks. Philanthropy doesn’t get much more up close and personal, does it?


Cecilia Hogan heads prospect research at the University of Puget Sound in Tacoma, Wash. She is a volunteer editor for Internet Prospector, a Web site for prospect researchers, and the author of Prospect Research: A Primer for Growing Nonprofits (2004: Jones and Bartlett). Her e-mail address is chogan@ups.edu.
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