Fundraising not so Fun Any More

It's been five years and two months since the last blog entry here. So, have things improved for charitable fundraising in the interim?

Sadly, I have to say no, I don't think so. Here's why.

Sure, there are many more billionaires, and their lesser wannabes the millionaires.  The one percenters are increasing apace.  And if you believe the tabloids, there's a lot more money flowing from the rich to charities here and around the world.  So that should be good for fundraising, right?

But these richest elites aren't giving any more to charity on a per capita basis, and they're not increasing their annual giving as a percent of annual income, or assets.  They need the tax deductions and the image-boosting notoriety, certainly.  But they're not the most generous donors.  That honor is reserved for their poorer middle class cousins.  

Also some of the wealthier billionaires are not really giving to charity, or, shall we say, for charitable purposes.  They use their gifts to set up personal or family art museums, or foundations.  They fund ideological think-tanks in order to buy elections that directly accomplish their own political objectives.  Can one, indeed, call this "charitable" giving?  It's more of a tax dodge than anything.  So it's irrelevant for fundraising when you come right down to it.

Unfortunately, the IRS hasn't seen fit to strike these new types of so-called "nonprofits" from the lists of qualified charities.  So much of the touted increased giving by the wealthy is self-serving, not public-serving.

To the contrary, fundraisers have typically found America's middle class a much riper field in which to harvest gifts for the common good.  It may take more solicitations and more time in the homes and offices of our donors, but the harvest is richer, and brings fruitful benefits for the whole society.

But after five years what do we see?   Half the middle class has been put on a slide to slavery by the neo-cons and the big corporations.   They now find themselves in poverty.  And the other half is on the way down.

Our middle class donors are also in debt.  Because as their wages stagnated or been cut directly, middle classers have tried to keep up their lifestyles.  They're constantly bombarded by corporate advertisers to buy the latest stuff in the stores.  And they're running up mounds of consumer debt doing that.  And we must mention the fact that their kids are getting their college educations by also mounding up huge education debts.

Well, that means our formerly very responsive middle class donors aren't as loyal and generous as they used to be, through no fault of their own.  And, incidentally, the bankers are getting a lot richer as a result.  So the charities lose while the bankers win.

That puts a strain on charity budgets, and charity fundraisers.  As a fundraiser, when you find out a dozen of your former best donors are now clients of your human services charity, that is a sorry state of affairs.  And one thing I think this says is that economic inequality coupled with political ideology and the relentless pursuit of globalized capitalism is ripping our civil society to shreds right along with our social safety net.  That doesn't augur well for our nation's charitable organizations, because they've got more people's needs to meet and less money with which to meet those needs.

Ordinarily I would chalk this up to the shifts all nations are undergoing these days in moving further into modernity.  As seen in that view we could anticipate a reversal of fortunes for the charities within a decade or so, maybe a generation.  Typically, Americans have the strength and the good sense to understand what's happening and invent new ways to redistribute wealth.

But there's now a complicating factor that's going to make the picture a lot worse: the pending climate disaster.  And when you cross that with all the other changes we're still getting accustomed to, I think it spells real trouble not only for fundraising, but for nonprofit management generally.

James Baldwin once wrote that history "always arranges to bill a civilization at the very instant it is least prepared to pay."  That's our lot at the moment.  The way I see things is this:  We need to restore the basic elements of civil society that we've shredded to bits over the last century.  We also must expunge racism from its deep entrenchment in our nation's institutions.  Then we need to restore democratic governance to our people, and, in the process, create a new economic system and get some new political institutions that more effectively represent real flesh-and-blood people.  But then the icing on the cake comes along -- we're headed swiftly down the track to climate disaster.  And when the food, water and shelter get scarce, and the nation's wealthy elites turn out to have the resources all the rest of us need to survive, there's going to be more work for our nonprofits than we've ever seen.

And that's going to put a certain new kind of edge on fundraising, isn't it?

Are Ineffective Nonprofits Being Replaced?

Our blog today involves an article entitled “Catalytic Philanthropy” by Mark. R. Kramer, a philanthropy consultant, published in the Stanford Social Innovation Review for Fall 2009. I found this article most interesting, and hope that you do as well.

In this article, Kramer points to a relatively new phenomenon in the philanthropic marketplace, and it has the potential to revolutionize the entire nonprofit sector. Why? Because what he’s talking about is how wealthy donors are NOT giving to existing charities but ARE taking active steps to solve problems and resolve issues in their regions or communities.

In effect, what Kramer is saying is that traditional nonprofits just aren’t cutting it. That they are not effective at bringing about social change. They’re concerned with sustainability for their own organization, perpetuation of services to target populations, but not getting at the CAUSES of our social ills.

Therefore, some donors, who have the means and the inclination to do this, are having a good deal of success in effecting the kind of social change we normally think nonprofits are designed to bring about by simply rolling up their sleeves and investing their money in strategies that are getting the job done.

So the question is, Are Nonprofits today capable of “making society better?” Or are they just putting a lot of band-aids on social problems that continue to fester; are they more concerned with their own survival than they are in maiing society better? AFter all the conservatives have shifted responsibility for doing that from government to the nonprofit sector? Are we up to the task? Are we getting the job done?

Here are key excerpts from Kramer’s article.

Kramer starts with a stunning example of Thomas Siebel who does philanthropy differently from other donors. As the founder of the software company Siebel Systems Inc., he is one of a handful of philanthropists who have the resources to devote substantial time and money to charity.

In 2005, while spending time on his Montana ranch, Siebel became concerned about the rampant local use of methamphetamine, or “meth.” Rather than writing a check to a local nonprofit, Siebel took the time to find out why people become addicted to meth. After learning that first-time users were typically teenagers who were unaware of meth’s risks, Siebel created the Meth Project to change teenage perceptions about the drug.

He brought together experts and hired a major San Francisco advertising agency to develop a hard-hitting campaign that would reach 80 percent of Montana teens with at least three ads every week. Kramer says the ads were world-class: With production budgets of $500,000 to $l million each, they were directed by leading Hollywood figures, and the ad campaign has won 43 awards in national and international advertising competitions.

Kramer reports that Siebel's ads were gut-wrenching: Tested in focus groups to capture a teenager’s attention, they were far more brutal than anything the community had seen on television before. Because Montana is a small media market, Siebel’s $2 million annual advertising budget generated more than 45,000 television ads, 35,000 radio ads, and 1,000 billboards in the first two years.

The results have been stunning. Between 2005 and 2007, meth use in Montana dropped 45 % among teens and 72% among adults, while meth-related crimes fell 62%.

Kramer reminds us that Siebel’s success in fighting meth abuse stands in stark contrast to the modest and often indiscernible results that most philanthropists have achieved. In the quarter century between 1980 and 2005, U.S. annual charitable giving in constant dollars grew by 255% and the number of nonprofits more than doubled to 1.3 million. (In 2007 and 2008 we topped $300 billion!) Per capita giving in the US is three times greater than any other country in the world.

However, Kramer says, during this same 25-year period, the U.S. dropped from 2nd to 12th among the 30 countries that are members of the Organization for Economic Co-Operation and Development (OECD) in basic measures of health, education, and economic opportunity.

Kramer admits that without philanthropy, conditions would likely be even worse. Yet whatever benefits philanthropy may provide, it is not delivering the kind of social impact Siebel achieved. If philanthropy is to become an effective way of solving pressing social problems, Kramer says, donors must take a new approach.

Here is one of the key points of the article: Kramer says that for most donors, philanthropy is about deciding which nonprofits to support and how much money to give them. These donors effectively delegate to nonprofits all responsibility for devising and implementing solutions to social problems.

Kramer goes on to say that despite the sincere dedication and best efforts of those who work in the nonprofit sector, there is little reason to assume that they have the ability to solve society’s large-scale problems.

And then he tells us something of which we are all too painfully aware: the overwhelming majority of the 1.3 million US nonprofits are extremely small: 90% of their annual budgets are under $500,000 and only 1% have budgets greater than $10 million. Despite their often-heroic efforts, Kramer says, these nonprofits face severe limitations.

And here’s another key point:
Taking a cue from Paul Light's book on capacity-building, Kramer reminds us that each nonprofit functions alone, lacking the infrastructure to learn from one another’s best practices, the clout to influence government, or the scale to achieve national impact. They focus primarily on their own institutional sustainability.

Collaboration throughout the sector is almost impossible, Kramer says, as each nonprofit competes for funding by trying to persuade donors that its approach is better than that of any other organization addressing the same issue. There is no assurance -- nor even any likelihood -- that supporting the under-funded, non-collaborative, and unaccountable approaches of the countless small nonprofits struggling to tackle an issue, will actually lead to workable solutions for large-scale social problems. These nonprofits are unlikely to create the lasting reform that society so urgently requires.

Kramer goes on, then, to make the point that, in contrast to existing nonprofits, "catalytic philanthropists" have the ambition and the resources to change the world and the courage to accept responsibility for achieving the results they seek.

• They engage others in a compelling campaign, empowering stakeholders and creating the conditions for collaboration and innovation.
  
  
• They use all of the tools that are available to create change, including unconventional ones from outside the nonprofit sector;
  
  
• And they create actionable knowledge to improve their own effectiveness and to influence the behavior of others.
  

Kramer’s research suggests that if donors want to solve a problem, they must decide to do so themselves. Wealthy donors, he says, have a powerful role to play that goes beyond merely supporting existing nonprofits. Private donors, foundations, and corporations have the clout, connections, and capacity to make things happen in a way that most nonprofits do not.

By becoming directly involved and taking personal responsibility for their results, these major donors can leverage their personal and professional relationships, initiate public-private partnerships, import projects that have proved successful elsewhere, create new business models, influence government, draw public attention to an issue, coordinate the activities of different nonprofits, and attract fellow funders from around the globe.

All of these powerful means for social change are left behind when donors confine themselves to simply writing checks to charity.

So, we have to ask ourselves.... Why aren't the Nonprofits in our Voluntary Sector taking the same kinds of steps to solve problems, get to the root of social ills and make systemic changes?

Kramer does say, however, that his “catalytic philanthropists” must be as cautious as they are bold. Things aren’t that simple. Philanthropists cannot catalyze change by acting alone or imposing a solution, convinced that they have the answer before they begin. Instead, Kramer advises, they must listen to and work with others, enabling stakeholders to develop their own solutions.

Kramer also advises that in these situations of significant social change the people with the problem have to become engaged in solving it for themselves. They must be engaged with the “campaigns” set up by these wealthy major donors. This was apparently the case in the Montana Meth Project. Additionally, he says, the systemic changes needed to significantly impact even relatively simple community problems are mind-bogglingly complex.

And here, in my opinion, is another very significant key in Kramer’s concept: The obstacle isn’t that no one knows any answers, but rather that the uncoordinated actions, narrow constraints, and conflicting incentives of different stakeholders and different sectors of society perpetuate the status quo. So this is going to be a block to most nonprofit organizations, as well as to these energetic, wealthy donors seeking social change.

Kramer optimistically claims, however, that “catalytic philanthropy” has the ability to cut through these divisions by stimulating cross-sector collaborations and mobilizing stakeholders to create shared solutions.

The readers of this blog will note that something of this same approach can be found in the recent book by Doug Henton et al entitled "Civic Revolutionaries," in which the authors, all protoges of the late John Gardner detail new approaches, and cite many case studies, in which systemic changes are being made in complex decision-making environments involving many strong competing interests.

Kramer suggests that using this method of “shared solutions," systemic reform requires a relentless and unending campaign that galvanizes the attention of the stakeholders involved and unifies their efforts around the pursuit of a common goal.

This is something, of course, that I personally think most existing nonprofits would find mind-boggling. Kramer says that in one of these campaigns more than 300 organizations and institutions in the Greater Cincinnati area. These groups now participate in a project called “Strive;” they include school districts, uniiversities, private and corporate funders, civic leaders, and nonprofits

But such a wide and far-reaching, in-depth campaign isn’t cheap. Kramer says the Strive campaign has a combined budget of some $7 billion.

It is clear from Kramer's account that systemic change depends on a sustained campaign to increase the capacity and coordination of an entire field. No single intervention attacks the root cause of, for example, educational failure. Instead, the entire system is gradually becoming more coordinated, informed and effective.

Organizations throughout such a campaign, Kramer says, learn from each other, reach agreement on performance standards, and find ways to collaborate that increase the effectiveness of all participating organizations. Catalytic philanthropists have used a wide array of other tools from outside the nonprofit sector to bring about social change: corporate resources, investment capital, advocacy, litigation, and even lobbying.

Now, my reflection on Kramer's account is that this method of getting together these huge multi-faceted approaches to regional problems is truly VERY different from the way most Nonprofits work!

Kramer ends his article on the note that philanthropists with the time and resources to become personally involved must step forward to become catalytic philanthropists. That’s not cheap, and it’s something that involves a lot of hands-on action by the philanthropist. Clearly, this kind of social reform is NOT for the faint of heart!

But Kramer is convinced by quite a few continuing projects of “catalytic philanthropy” that it is possible for these philanthropists to see measurable impact from their efforts, and realize the potential that exists in this multi-faceted methodology for changing social conditions meaningfully.

What I take away from Kramer's article is that philanthropy is indeed a powerful tool for social progress, but only when donors make it so by their very large donations and their personal involvement. And now, I’d like to leave you with a question: If “catalytic philanthropy” – or whatever you want to call it, where activist wealthy patrons becoming personally involved in mounting these very expensive but also very EFFECTIVE campaigns to bring about systemic change and actually solve our social ills and make society better, what is the 21st century role of the average nonprofit organization?

Will they fade into obscurity? Will we have two classes of service in the Voluntary Sector – those who really make society better through systemic change, and those who only apply band-aids? Maybe we have that already. Do we need the band-aid approaches as much as we need systemic change? Or will nonprofits eventually “get it” and move more into collaboration, mergers, and coordination, and tear down their silos in favor of making society better? After all, that’s what they’re supposed to be doing in the first place, isn’t it?

The reader here may want to refer to some of the writings of Peter L. Berger and Richard John Neuhaus who have put forward the idea that nonprofits serve as "mediating structures" of public policy. This was part of the basis on which conservatives have removed from government the responsibility for the citizenry's well-being and placed it squarely on the shoulders of the voluntary sector. This, along with Reagan's blunders in social policy, has resulted in our over-crowded, under-funded philanthropic marketplace.

So, stay tuned for more on “catalytic philanthropy” and similar new ideas in making philantyropy more effective in coming months and years. Things are getting very exciting! Maybe we're about to see a radical change in the voluntary sector in this country.

The Origins of Today's Philanthropic Marketplace

Following is a brief digest of some of the factors involved in public policy, media, nonprofits, and economic and demographic circumstances that have contributed significantly to the present over-crowded, under-funded philanthropic marketplace in the United States.

A. “Reaganomics” and the Public Policy of Political Conservatives
1. Huge tax cuts for the wealthy were enacted during Reagan’s presidency in the mistaken belief that if the wealthy had more money there would be an economic expansion that would pay for itself in greater economic productivity and in lowering the national debt. The result was that the national debt increased dramatically, while the wealthy did not invest in appreciably more new business start-ups.

2. Cuts were financed by downsizing government agencies, with special focus on those human services agencies that provided much-needed relief to the poor, as well as those services that tended to make society better, like community and neighborhood development and rehabilitation.

3. Downsized government agencies at federal, state and local levels are giving much less money to nonprofits to distribute in their programs of service.

4. Largely human service agencies were downsized the most.

5. This has left many nonprofits, particularly human service agencies, struggling to find enough money with which to provide services to those in need.

6. The IRS was also downsized and it lost many people and processes
a. IRS now cannot afford the manpower to screen charities for effectiveness
b. Charities are proliferating at more than 40,000 per year, last 20 years

7. Conservative monetary and fiscal policies have resulted in a reduction of income for the middle class generally, while providing for steadily increasing wealth at the top of the society. The gap between the rich and poor is widening, and the middle class wage earner is bringing home less today than 20 years ago. This has the effect of dampening the ability of those middle class families to make charitable contributions.

B. Press, Media and the “Watchdogs”
1. The rise of self-appointed “charity watchdogs” on the Internet
a. some hostile to charities, trying to protect donors
b. others trying to be helpful to both charities and donors

2. Press and media like to make headlines of charities that mis-step or fail because they make news. A consequence of this is that American donors are now afraid of the charities they would like to support, for reasons that are largely imagined or exaggerated.

3. A few studies done in the late 1990s and early 2000s reported that American donors were dissatisfied with charity performance in a variety of areas.

4. Consequently there is a general theme present in much journalistic reportage that Americans are, on the whole, dissatisfied or disaffected with charities and their performance.

C. Tough Economic Times
1. The smaller recessions of the 1980s and 1993 lead to a steadily increase in
demand for public services and service provision by nonprofits.

2. The Great Recession of 2007-9 has caused great hardship in nonprofit
fundraising, largely by lowering or taking out the middle class donor’s ability to give

3. Greatly multiplied demand for nonprofit services, particularly human services, resulted from these economic hard times. Additionally, the middle class wage earner’s take-home pay has declined in terms of what it will purchase.

D. Internal Challenges within Nonprofits
1. The boards and executives of huge numbers of nonprofit organizations are not investing in capacity-building efforts or infrastructure needed to strengthen their organizations for providing more and better services to the public.

2. Partly this is because of fear of the media, press and “watchdogs” and the belief that donors are afraid of “administration” and “fundraising” and “salary” expenses in NPOs.

3. Partly it is a mistaken desire on the part of many boards and executives, similar to that of some donors, to make sure that every last cent is spent only for programs of service, and that relatively little is invested in the organization’s capability or infrastructure.

4. Many nonprofits today still are reluctant to be clear and transparent with the American government and public about their financial status and dealings. This tends to feed the hunger of media and the press; it also fuels the investigations of representatives in Congress like Sen. Grassley, who, himself, tends to make headlines that reflect negatively on the nation’s charities.

E. General Factors
1. Because there are more nonprofits, and because during the 1970s and early 1980s government serviced an increasing array of public needs in all fields, the expectations of the American consumer for public services that make the society better have increased greatly. Nearly everyone can take advantage of one or several services that help him/her make life more possible, easy or comfortable.

2. The cost of service delivery has increased dramatically over the past 20 years due to professionalism in management and the costs of labor, while the public demands both increased services and better service.

3. The demographic cohorts known as "baby boomers" and "Gen-Xers" have very different giving habits and preferences than their "Ike generation" forbears.
a. Many charities have yet to discover the giving habits and preferences of these cohorts and are still raising funds in ways that would appeal to the former generation of donors. This has hurt revenues through ineptness in fundraising.

b. The differences in giving habits and preferences by these cohorts has increased the costs of fundraising and volunteer management, at the same time it makes further demands on nonprofits to be transparent in their financial dealings, management and record-keeping.

Now you know the "rest of the story" about why fundraising in this country is getting to be so difficult. Only part of it is recession-related. The bulk of it has to do with public policy and the nature of our media.

Now we have ahead of us a difficult snarl of challenges to untangle and solve, so that our nonprofit organizations can get on with the work of making society better. It is to be hoped that Congress and President O'Bama will team up to put the government back in the business of making society better, too, so that nonprofits and government agencies can, once again, deliver the services and the social goods that we all need.

Giving Donors the Wrong Impression

I see in the latest Michigan Nonprofit Association newsletter "Links" that they have posted a series of what are supposed to be helpful comments for donors about how to choose charities for receiving donations.

One of these tips has to do with fundraising. The headline for this comment is "How much of your donation will go towards programming rather than administrative and fundraising exprenses?"

Under that heading, here's the text:
"Charities use your donations not only to carry out their charitable purposes, but also tio pay for administration costs and fundraising (which may include commissions to companies that solicit using telemarketing or direct mail). You have the right to ask exactly how your funds will be used. Althought there is no magic percentage in terms of how much money an organization should spend on overhead, it is smart to ask a charity what percentage of your donation will directly support programming."

What? You don't like fundraising? I mean, I know you don't like to DO it, but do you want to punish charities that do fundraising by not making your gift to those who engage in soliciting donations from the public? But how in the world do you expect, then, that a nonprofit organization is going to be able to meet the demand for services?

In my view the message that fundraising, or administration, is somehow "bad" or "inappropriate" or is somebody else's responsibility, is not a message we want to send to the donating public. It is just NOT appropriate for a donor to think that his or her gift ALONE out of all the others MUST go to programs, while anybody else's gift is OK to be used in these areas. Whoever thought of this doesn't understand the nature of community or the relationship nonprofits have within their communities to those they are helping.

Charities are scrabbling hard today for every dollar they can get, because the needs for service are drastically increased, the marketplace is overcrowded with underfunded charities, and donors tend to see themselves as limited in what they can give. We don't want to preserve the mis-perception or dis-information about fundraising and charitable giving that is already too prevalent on the Internet and in other media. The so-called charity "watchdogs" have already done too much damage in trying to use cost ratios to advise donors and in making "fundraising" seem like an undesirable activity.

But why do I say this? Let's get real, folks. Charities are not businesses; so ratios are inapplicable. They just don't work when the motivation for giving and volunteering isn't profit, but the satisfaction that comes from helping. The reward system for charitable giving and volunteering isn't efficiency, it's meeting needs of people who need help.

Administration? Salaries? In a nonprofit organization that's how we pay people to deliver the services that accomplish our mission. Without administration and salaries, we can't succeed in our mission; we can't meet peoples' needs; we can't do charitable work. It's as simple as that.

Let's take another issue: Charities have three sources of income: fees, government ontracts/grants and contributions solicited by fundraising from the public. Without fundraising activities, there is very little if any ability to provide services in most nonprofits today, particularly in the small- to mediumsized- nonprofits. If a donor is skittish about giving to a charity's fundrising efforts, they don't have the right understanding, because without those fundraising programs, the charity wouldn't be able to deliver much needed services to their target populations.

Take a look at it another way: the donor who supports charity fundraising effectively leverages their gift many times over, because the charity will use that gift to involve other donors and the number of contributions multiplies geometrically. The gift to fundraising is a gift that really gets a great deal more "bang" for the donor's buck than a donation to any particular program area. In the program area, the donation is used up. In the fundraising arena, the donation enlists hundreds and thousands of gifts from others.

Let's take a larger look. In the nonprofit world today, we exist in an over-crowded, under-funded philanthropic marketplace. This has been the case since the mid-1980s. What's happening is that the needs for the services nonprofits perform have doubled and quadrupled in the last 20 years, while government has been steadfastly getting out of the business of making our society better, having left that to the nonprofits. At the same time, the expectation of the American people has increasingly demanded that more services, more types of services, higher quality of services are made available to the public by nonprofit organizations. That means the costs of providing services are increasing as is the demand.

Now, put in the midst of that equation a "picky" donor or a charity "watchdog." What's the problem here? If you don't trust nonprofits to do the right, the honorable, the charitable thing with your donation, don't give. But, if you want to serve people, help people, help nonprofits meet the terrific need that's out there, then please realize that with nonprofits it's all one package: administration, salaries, fundraising and programs. Without all these parts, nothing can happen, no service can be given.

What's not to like here, if you're a donor? It's all part of the way a charity works.
Administration is people providing services.
Salaries are people providing services.
Programs are people providing services.
And fundraising brings in much needed revenue that helps pay for all the people who are out there providing the services.

Now, if you want to ask a charity how much the CEO gets paid compared to the mailroom clerk? That's a good question, one that can tell you a lot about the organizational culture and management practices of the charity. You want to ask about how much the menbers of the Board of Directors give to the charity each year? That's a REAL good indicator of what's going on. You want to ask about whether the charity uses fundraising consultants or other suppliers in telemarketing and direct mail? Good questions, but you need to go into this knowing more about those industries and their costs than most donors know. But it's still a good question to ask.

But, Please. In terms of trying to advise donors away from "administration" or "fundraising" give the nonprofits a break, OK? Charities need the money, urgently! And they need the latitude to put YOUR money, Mrs. and Mrs. Donor, to work where they know it will do the most to help them accomplish their mission.

The public needs to understand just how different the nonprofit sector is from the typical business organization. They're worlds apart, because the nonprofit is going to care about people, and about helping people, and about giving America a better society in which to live. You can't say the same thing about Bank of America or Lehman Brothers, or Bear Stearns and those financial houses or multi-national corporations, can you?

We urgently need to re-educate the giving public to counter the dis-information that's been put out there by the so-called "watchdogs" and others. Fundraiisng is NOT a bad thing to have happen. That's the way charities have existed for time out of mind. If fundraising doesn't happen, no charitable work can be done. OK?

Now, go make your donation to your favorite charity.

Nonprofits Influencing Public Policy?

Only two sectors make public policy in Michigan today: business and government.

For example, at the Mackinaw Conference each spring, you see the Chambers of Commerce coming together with representatives of the legislature and the governor’s office, but that’s all.

We see Business lobbying Government to make sure its interests and desires are heard. Business presses its case, and tells its stories, but no one else is invited.

For example, representatives of the Nonprofit Sector are not invited.

But look at this: the Nonprofit Sector in our state of Michigan is large and substantive. We employ nearly 10% of the workforce, some 440,000 people, and we have $179 billion in assets. We spend more than $60 billion each year to generate $108 billion in economic activity.

Or, take a look at values and experience among Nonprofits. Michigan has some complex social problems involving many, varied, powerful interests that need to be brought together to devise creative solutions.

Transportation, community development, corrections, health care, homelessness, education, economic development, just to mention a few.

Nonprofits have the skills to bring people together to solve problems adn meet needs.

Nonprofits also have the set of values that focus energy for creative solutions tp problems.

Nonprofits have a nearly 250-year history of solving problems and meeting needs.

So why aren’t Nonprofits at the Public Policy Table with business and government?

The answer, unfortunately, is very clear. In fact it’s embarrassingly simple.

While corporations and local businesses have joined together to talk through their common problems, and forge legislative agendas to help them, we in the Nonprofit community remain isolated behind the walls of our silos, afraid to collaborate, hesitant to reach out to each other, and reluctant to discuss what we need..

At the same time, we have a very serious situation that needs our attention:

The Michigan Legislature has developed a structural budget deficit of enormous proportions. For at least two decades, we’ve argued over a steadily shrinking pot of dollars.

Rather than deal with the issues that created this problem, legislators keep trying to cut their way to a solution. Every year more cuts. They cut cities, education, they cut nonprofits. They cut the very things we need most to keep our state vital.

Why has this happened? Legislators are fearful, or reluctant, to make substantive changes, or have vested interests in the way things are. So nothing is done, as the pot gets smaller.

But in the midst of this situation there is a solid place for Nonprofits and Government to work together. Government values and Nonprofit values are much closer than the values of Government and Business.

On the one hand, Business values are: the bottom line, continued accelerated growth of company size and profits, and continued growth of opportunity.

But business growth ignores education, disregards neighborhoods, discounts communities, and rejects setting aside more resources to make our society a better place for all of us to live.

On the other hand, Nonprofit and Government share values of the public good. Both sectors have a history of providing necessary services for building strong communities, increasing individual capability, providing education and training.

We share concerns for community revitalization and sustainability. We both have abilities for solving complex problems that involve many competing interests.

So it’s natural that the Nonprofit community should be a powerful and effective Partner of Government in the setting of public policy.

Another thing we must do is increase resources, so that the overall state revenue pot is large enough to do the job of governing well.

But business doesn’t want to pay more taxes. And many of our voters are simply not educated enough to consider allocating more of their resources for the common good. Even though they would benefit.

So the time is right for Nonprofits to come together:
1) to remind the legislature of the responsibility Government has to the greater good of all;
2) to advocate for increased resources so nonprofits can do what we do best
3) to encourage legislators, putting the power of the Nonprofit Sector behind their efforts to do the right thing.

One problem that faces us, as I mentioned before, is the silos out of which many of our nonprofits operate.

We need to change this: we need to start lowering those silo walls and cooperate, collaborate, and advocate for Nonprofit values, a high level of education for our citizens, and the creation of sustainable neighborhoods and communities.

We can do this by starting to meet together to form a general Nonprofit Sector legislative agenda that will provide all kinds of nonprofits the resources and conditions to do a better job of making society better as we each pursue our various missions more effectively.

This is our challenge. If we work together we can make the Nonprofit Sector an effective partner with Government in pursuit of our mutual values. And that’s good for all of us.

Raising Taxes to Make Society Better

I am impressed by the fact that there seem to be a huge number of people out there in our state of Michigan (members of both parties) who are not very well educated, and who think of "government" as something quite other than and quite apart from themselves. Consequently, their basic stance is that the smaller the amount of taxes they pay the more they personally take home and the less they have to "bother" with the government.

It's as if they're saying "starve the greedy bums and they'll go away." What they just don't understand is that the government is all of us; we all have a responsibility to the communities in which we live to share the cost of the very necessary services we organize on our own behalf. And I think it's simply because nobody they respect and trust has ever told them any different,

I used to be one of these kinds of people, when I was in my 20s and 30s. I had a family of 5 kids, three from another marriage, and 2 of my own. On a fundraiser's salary with the Salvation Army it was devilishly hard to make ends meet. It was even harder to think of possibly helping myself and my family "move up" to a better level of lifestyle. That was, of course, the general impulse of the time -- get a life together that was measurably better than whatever your father and mother had enjoyed.

During those years, thinking about taxes was like thinking of how to avoid a plague; I did not think of how every cent of the taxes I paid was coming back to me and my family in terms of protection, rules and regulations that provide safety and comfort, conveniences, services, or some other beneficial way. "The government" was just another complication in my life that detracted measurably from that life I was struggling to make.

Yes, I had my Civics Course in high school. But the problem with that course was that while they told us what the government was organizationally and how it worked, they didn't emphasize a most critical point: that our government is all of us together organizing a) to provide a regulatory environment that keeps us from stepping on each others' toes, and b) to provide services that we all need and use daily. I just never "got it" for a long time. It wasn't until I got a lot closer to municipal government through a Michigan Municipal League project I was involved in that I finally began to see things in a different light.

So I'm thinking that what we need to do is embark not so much on a propaganda campaign relative to taxes or relative to specific issues that force us to raise taxes for programs we desperately need to function, but on educating people, helping folks out there throughout our state and nation, who don't have anything in the way of an education, to learn how THEY ARE the local government and the state government and the federal government. We need a method of helping them, as adults, now out of school, to identify themselves as part of a community, like they can feel part of a church group, or a community group, or even the gang of guys at the local bar.

It's not that most people don't have some sort of community roots, it's that they somehow have missed the message that they ARE their government and that whatever is their fair share needs to be paid in order for them to live as decently as we all do in this country. And that there are both protections and advantages as well as responsibilities in this. That's probably where our lack of allowing education to have a high priority for our state has doomed us to have to maintain government in the face of such incredibly isolationist and provincial attitudes about the individual's and the community's responsibility.

I will admit that there may well be the occasional folks who just say "me first and the hell with the other guy" or who say "I'll give as little as I can so I can get more services for free than the next guy." Just your basic "free-riders." But I think this kind of intentionality and meanness about it all is pretty rare.

So maybe what we need to do is produce a video that does a persuasive and compelling bit of this educating; something that would help people identify personally with their government as a piece of themselves that they need to
take care of.

Anybody interested in that? That's the sort of thing I do pretty well. And I wouldn't mind lending a hand with this sort of effort. Though I would need some help in doing it. Then we could take such a thing and put it all over FaceBook and YouTube and MySpace etc. and link it in to Twitter and make tweets out of it, etc. And the video would tell the story in a fresh, compelling, believable way that government is us all, organizing to do what serves our needs.

One more thought, and then I'll quit: I believe we need today a careful balance between the community and the individual. Our system, which combines capitalism and democracy in very unique ways, is very much based, in this country, on a high level of advocacy for the individual's rights. And justly so, given where we came from. But it's not all a one-way deal.

We need also, however, to be protective of the community's well-being and we together need to be insisting on and educating people in their responsibility, or their need to act responsibly toward the communities in which they find themselves. Not IMPOSING it from outside, but educating and motivating people ABOUT it. So they can modify their stereotypes and their behavior and become responsibile members of the community.

Throughout history we can see instances where individuals fight their way to the top or are born at the top of the heap and rule others: (monarchy, and feudal estates right down to democracy in America with the tycoons and the poverty-stricken struggling in competition as we worked hard to evolve a middle class larger and more powerful and economically self-sufficient than both.

Then we have various instances of where the community or the nation is considered foremost. which would take us from socialism and communism, even some forms of fascism, down to democracy in Japan as it is practiced today, with a strong emphasis on the community in the midst of a democratic form of government.

But somehow I think we need to get that mix of co-responsibility back and forth between individuals and community ironed out and expressed a little more evenly.

Democracy and capitalism together is our system; sure, but it can be improved with some careful consideration for both individuals and the communities in which they find themselves. I guess I'm just an old "tax and regulate Democrat" at heart. Sure I want my rights as an individual protected, absolutely. But I am also needed as a responsible and responsive member of the community group in which I live, do business and function.

James Madison, in the Federal papers dealt with "factions" as groups of people who gathered together to exploit their own views or actions to the exclusion of, and perhaps to the detriment of, others. So our founding fathers framed a constitution that allowed us to continually re-invent ways of dealing with such people, according to the times in which we have lived.

But what the founding fathers did not address as helpfully is the way in which communities do have both a moral and a practical claim on individuals, just as individuals must work out their claims on the communities in which they live. It's a two-way street that Americans have had relatively little opportunity to practice, in my way of thinking. I believe it's a fragile balance, too. Too much emphasis on either one can complex problems; and that has happened at various junctures in our history as a nation.

I've been re-reading Richard Hofstadter's "The Era of Reform," (1870 to 1920) and it seems that this period of history presaged our own era. Populists and Progressives, working out the relationships between individuals and community, trying to wrest justice for individuals from the community. But not necessarily giving attention on the individual's responsibility back to the community as a place from whose decisions we all do benefit.

It's as if our whole history is the expression of fear that community (the municipality, the state, the nation) would take over and squash the individual -- which, of course is the anxiety from which our system was birthed, and the basis out of which we so denigrated the socialist and communist experiments of the early 20th century.

And under these regimes, "The State," (we always seem to talk in this kind of discussion of "governments" rather than seeing communities of which individuals are a part) operating as monarchies and oligarchies or in totalitarian systems, has attempted to act on behalf of the people (the community) with disastrous effect.

But have we really worked out the best way to do democracy and capitalism together? I think here's a wrinkle here that needs a further bit of ironing. Mostly it needs educating and motivation. We need to keep working on this issue of the individual and the community. Each has responsibilities to the other, some of which seem to have gone unrecognized. Each need certain rights and freedoms. It's a balance we need to strive for.

We're "Free," But From What?

In this country we have a long, proud and loud history of "freedom." Freedom from tyranny, principally. The tyranny of monarchy, oligarchy, aristocracy, despotism totalitarianism and fascism. Freedom from government that oppresses the individual either politically or economically. Freedom for the individual to do whatever he/she wants to do. Along with that we have, over the last two hundred fifty years, developed the set of rights which we are willing to accord to the individual. And we protect these rights militantly and vociferously. We have also developed the symbols, the institutions, the infrastructure to reinforce that belief in the rights of the individual. So, in this respect we are "free."

But we still have further to go in the journey of our development as human creatures. For example, we must get ourselves to the point where we are free of the tyranny of employers and the work place; the work place must become more humane, and more in concert with our environment, so that productivity and sustainability don't fight each other at the cost of our planet, human lives or personal integrity.

We need also to get ourselves free from the effects of our ignorance, our fears and anxieties, our stereotypes -- the stuff that's in our (individual and free) heads. This is the stuff that keeps us from making the decisions that will help us most.

Right now, the thing we need most, the thing we need that will do us the most good, especially in Michigan but also generally across the nation, is education. Yet ignorance, fear, greed, anxiety, stereotypes all are forcing people in legislatures and in the hustings to relegate education not to the top of the priority list but somewhere down at the bottom of the list.

That's hurting us. That keeps us robbing the future and calling it "gross domestic product." (from Paul Hawken in his Commencement address at Portland U.) Lack of a state and national highest priority emphasis on education keeps us from advancing because it robs us of the creativity we need to come up with solutions to our problems that we desperately need; but, instead, we keep trying the tired old solutions over and over again. Just trim the budget, cut the budget, one more time.

So we argue in our Michigan legislature about a few hundred million dollars in a pie that is getting smaller and smaller the longer we refuse to deal with Michigan's corrections system and health care. And the longer we refuse to raise the taxes we need so desperately to upgrade the level of education for our people so we can make something of our society in the new "Age of the Unthinkable.". (See Joshua Ramos' new book by that title.)

In the words of Arthur Miller, the playwright, in his book "Chinese Encounters" which he co-authored with his wife Inge Morath, the photographer at the end of the 1970s, this is "the paradox of human need bound to the human resistance to change." That's quite a phrase, isn't it? Even though we need greatly increased education so desperately, yet we resist the changes necessary to make that happen. We argue about which dollars we're going to cut from the budget instead of building the budget we need and then selling it to the people of the state as their bounden duty and responsibility to do it.

Donor-Centered Fundraising

Some say there is a crisis in nonprofits' inability to acquire and then retain new donors. Maybe we're not being donor-centric enough. First, it might be helpful for you to read Penelope Burk's "Donor Centered Fund Raising" and get the benefit of her extensive research into the giving habits and preferences of the Baby Boomer and Gen-X demographic cohorts. Then here are some thoughts about what to do next:

The first thing boards, executives and fundraisers in nonprofit organizations need to do to gather the money they're leaving on the table (yes, even in the midst of the recession there's money out there to be had!) is to re-think and re-write the case for support for their organizations so that their donor prospects can see how they can achieve their objectives through the nonprofit organization's work.

The Ike generation is about gone. We're having to re-program ourselves to the Baby Boomers, the Gen-Xers, Gen-Y and the Milleniums -- the generational cohorts brought up on television and the movies. So if the case for support doesn't meet THEIR needs (forget about the charity's needs), they're not going to listen. And if it doesn't talk and move, they're not going to pay any attention. We must re-think our use of media. Yesterday's color brochure is today's video, podcast, web presentation. So, yes, costs of production are up because the media are richer and more powerful. But we've got to pony up and invest in our fundraising infrastructure in order to make the oxytocin run and get the money that's out there.

The second thing we need to do is invent metrics that tell us just how much real sustainable "good" we're doing in society and how we're changing society for the better. These demographic cohorts want to see progress; they want to know that their gifts are making a difference. Doing good is just not enough any more. We must know that we're changing things, and we must report that to our donors and to the prospects we hope to solicit. We can keep new donors if we are attentive to their needs.

Yes, we must be donor-centered. But in doing that we have a ton of work and a good deal of investment ahead of us. New metrics with with to judge the outcomes of our service mission, and new infrastructure for fundraising and reporting to our donors what they are accomplishing through our work; these are the tasks on which we should focus to keep our donors giving to our causes.

Board members, executives and fundraisers need to think more about their donors than they think about their own needs and those of the organization they represent. But they also need to invest in new tools of infrastructure and capacity-building. Which means, in turn, that resources will need to apportioned differently and we need to scrap the idea that "every penny should be given to program."

There will be more on this theme, stay tuned.

Reply to Nonprofit Quarterly article

Ruth McCambridge of the journal Nonprofit Quarterly has written an article sent by email today entitled: "Late Payments and Other Tough Stuff." In this brief but excellent article she relates the following comments from an executive director of a nonprofit organization that receives state funds for a local service population:

"One executive director told me that the state contract that comprises most of her budget requires that her organization never turn anyone away or even put them on a wait list. But they have just been informed that the state will not pay for any work done under this contract since mid April until September -- and the amount they will be owed at that time will be between $700,000 and $800,000. The organization has a credit limit far less than that so this makes the near future nerve wracking at best. In short, the state has forcibly taken a loan from this small organization while the agency worries about how to make payroll and tries to convince vendors to wait to be paid. Says the executive, 'We've always had to "slow pay," and all the providers have always found a way to make it through so there's never really been a huge up-in-arms, "this-has-got-to-stop" reaction.'"

Here in Michigan this type of situation is being experienced by hundreds of our nonprofit organizations as our state is in dire financial straits. But the financial crisis in Michigan comes as a result of two independent factors. Let's first take a look at this situation, then at the question involving payments to nonprofit service providers.

First in Michigan, for more than a decade, there is the refusal of the state legislature to deal with corrections and health care, while these two expenditure "lions" eat up the state's revenue in greater shares every year. We have a structural budget deficit that isn't going away, and we don't have the moral and political will to stop this from happening. All the legislators, in both parties, are afraid to deal with these two issues because they may well lose their jobs. ANd they would lose their jobs because the clear solution is that taxes are going to have to be raised, or else our standards and preferences in the fields of correcitons and health care are going to have to be drastically altered. Neither is a popular decision among Michigan's people, who pretty much want everything for themselves and nothing for the society -- we won't allow taxes to be raised, and we want to be comfortable in the niches we've created for ourselves individually given the present healthcare situation, and we really want people we don't like to be locked away with the people who are dangerous to us. So this means that each year the bulk of whatever revenues come to the state are going to continue to be eaten away by these two hungry lions.

Second, there's the worldwide Depression, or Recession -- whatever you call it, it's bad and growing worse, and thanks to the greed and avarice of the excessivly paid executives and managers of insurance companies and the financial and banking institutions of our country. Whatever it is, it's wreaking havoc with our states budget and presumably that of all the other states. And here in Michigan we have the death of the automobile industry to top it all off and make things even worse.

The result, then, is that property taxes and income taxes are not enough to make the state of Michgan's budget balance EVEN IF the above two issues of corrections and health care could be solved instantly overnight. So the consequence is that our state legislators and our governor just keep trying to cut, and shave, and cut, and shave the budget's expense column, and we're making public policy by dint of paring down the budget.

This is the chicken's way out. Legislators are not fulfilling the responsibilities of being elected officials; they're afraid of making the tough policy decisions that deal with issues we've had now for decades but have refused to face squarely. Even to the point that they have used the Federal bailout money to try to balance this year's budget.

Now, given this state of affairs in Michigan, my response to the situation with the nonprofits receiving cuts to their allocations to provide social services is this: If a state agency is going to a)set a condition that no one can be turned away or put on a wait list; and b)cut the amount of funding they pay for nonprofits to provide social services, and c) continue to be late payers to those charities, I see only one response that can really be made to this administrative type of public policy making: the nonprofit should stop serving the people, return any state monies held, and simply go out of business. Period.

There's really no other way to deal with this type of situation. Any move the charity's board or executive might make to try to stay in business and meet the needs of whatever service population we're talking about simply serves to set up a co-dependenr relationship that permits the state to have its cake and eat it too. If the charity keeps trying to stay alive and meet the needs of the service population, then the people are served off somebody else's dollar. They are served because the charity has gone out into the philanthropic marketplace and asked willing contributors to step up to meet the shortfall the state has occasioned. But that "shortfall" is pretty huge, so donated funds are not likely to cover adquately for very long.

State legislators first need to make just and sustainable public policy and then carefully thought out budgets need to be constructed to pay for its enactment of policy, in good economic times or bad; then taxpayers need to pony up to paying to make society better through presumably raised taxes, levied to meet the state's obligation or commitment to the maintain the social safety net. This would alleviate the need for contributors and donors being asked by the charities normally receiving state funds to pay for providing services.

The current situation just means service continues to that service population even though the state is not responsibly meeting its obligation for seeing to it that certain populations are served and their guidelines (no one turned away) are followed.

The state, any state, good economic times or bad, can't have it both ways. A state should not try to put the burden on nonprofits to pick up the slack and somehow find money to continue services when the taxpayers and their elected representatives will not raise taxes to keep the state's commitment to making society better. Public policy shouldn't be made in this co-dependent way. But that's what Ruth McCambridge's executive director is facing. We already have an over-crowded, under-funded philanthropic marketplace, thanks to Reaganomics and the conservatices' policies for the last thirty years. Now the recession brought about by their financial practices makes things even worse.

There is one other issue raised in this article, and it is this: that contributors to charity cannot, in the midst of a Depression or Recession that is international in scope, ever hope to give enough money to fulfill a state's obligations, or the federal government's obligation, to making society better and care for people in need. What we need is a strong commitment by a state or by the federal government to meeting peoples' needs and carrying out their responsibility for a livable and sustainable society as a TOP priority, recession or no, in good times or bad.

If we just stop serving the needy, and the many people who receive state and charitable services, then hopefully there will be enough hue and cry in the streets, enough tragedy and death reported by the media, enough expression of dissatisfaction with the state of things by knowledgeable people, and (god forbid) even mob action in the streets, that the state's legislators or federal elected officials will be forced to raise the taxes necessary to keep their commitment to the quality and sustainability of the social fabric. If nonprofits keep rolling over and refusing to end services and go out of business when states make these draconian cuts, we'll never get any further than we are now in having a public policy that, at both the federal and state levels, provides what people need to live in a society that is peaceful, just and sustainable. The voters won't be moved out of selfishness and complacence, the legislators won't be moved to act courageously, until disaster happens. You'd think we would have learned better by now, but we're apparently going to repeat a scenario that has been seen time and again: no action until disaster strikes.

We shouldn't be trying to keep these nonprofits going in the kind of rock-and-a-hard-place siutation that is described in Ruth McCambridge's article.

New Research from Cygnus and Penelope Burk

I have just seen two pieces written by Penelope Burk on her blog that reveal what she is learning in her newest study of 22,000 donors across the U.S. about their attitudes towards giving to charity and their thoughts about giving in a bad economy.

If you don't already subscribe to her blog, you might want to consider that possibility. This new survey has some incredible results in it, and most of them are counter-intuitive to the way most fundraisers, executives and nonprofit board members think about fundraising. Here are jus two examples:

1. Look at this quote: "But even before we start analyzing the results, I already know one thing — the days of fundraisers as the gatekeepers of philanthropy are over. Donors are in charge now, and they are making independent and provocative decisions about who they will support and how much they will give based on whether or not charities address their growing concerns; and at the top of their list is over-solicitation." Burk has a lot more to say about over-solicitation and whose fault it is and how it can be corrected. She is principally talking about direct mail.

Here's the URL: http://www.cygresearch.com/burksblog/?p=195

2. Here are some quotes from the donor surveys that demonstrate donor attitudes. Burk says, " Americans’ determination to give in spite of hardship, or their deep regret if they have to cut back on their philanthropy. Many included a phrase like, “Please let not-for-profits know that….” " There are quite a few quotes at this URL, many will make you stop and think seriously that donors are truly marvelous!

Here's the URL: http://www.cygresearch.com/burksblog/?p=198

I saw these two entries and thought immediately of the tremendous implications this ongoing research has for fundraising practices and procedures. It's a constant learning experience, and fundraisers need to stay continually vigilant and flexible to meet the demands of donors.

Best regards to each and all,

Proposed Limits on Charitable Tax Deductions

I see that the following press release was being prepared, and by now has been sent out by my fundraising colleagues. Here's an excerpt that explains what they're up to.

"The Association of Fundraising Professionals (AFP) and the Association for Healthcare Philanthropy (AHP) oppose the proposal in the President's budget that would impose new limits on charitable tax deductions. Both AFP and AHP applaud the President’s overall efforts in the budget to revive the economy, reform health care, revise energy policy and tackle other important issues affecting the country. However, the budget also contains a proposal that sends the wrong message at the wrong time to those who support charitable causes. It puts forward a scheme that would effectively devalue charitable gifts made by the very people who are in a position to make substantial donations at a time when they are sorely needed...the proposal would limit the federal tax deduction they may take for their generosity to 28 percent. Currently, they may claim up to a 35 percent deduction....The federal government, therefore, should seek ways to bolster charitable giving—as opposed to requiring charities to do more with less."

Frankly, in my view,while the sentiment is noble, and while this effort is historically consistent with the approach of nonprofits any time the President or Congress threatens to tinker with the tax deduction, it's not helpful now, and is in the wrong direction.

In this time, and in this economy, fighting on multiple fronts, the President needs us to to support his efforts, not detract from them for the sake of satisfying our own preferences. Sure, we'd all like the tax on capital gains and the tax on regular income to be even higher, so that the wealthy could escape even more taxation by giving to charity. That would be nice!

In reality, however, budgets need to be balanced, outputs need to equal inputs and if we're going to reduce the whopping federal deficit caused by the greed and failure of practically the entire financial system, then we need to find the money sin a host of places. If it means a few points less in charitable tax deduction, let's just thank our lucky stars we have some deduction left.

But even more to the point, as representatives of the nonprofit sector we've screamed "bloody murder" any time the tax deduction comes under fire. It's a knee-jerk reaction bourne from many years of having to defend the voluntary sector from business and political vultures who don't understand the human impulse to give and help a neighbot. Like all entities in the political process we can tend to become defensive about our turf, especially when there are those out there who don't understand the voluntary sector and its value to society and would easily vote to just wipe it out. We don't like Congress to mess with the tax deduction because we never know how that will turn out. But, while quite understandable, from the the position of having to defend our turf, and quite appropriate,from the viewpoint of being within a nonprofit organization and stretching every hard-earned donation dollar to touch as many lives as possible, nevertheless, right, now I believe this kind of defensiveness is unnecessary and unhelpful. Why?

Two reasons: First, if we're going to create a better, more just, more equitable society, then we must do more dialoguing and less debating. And dialogue involves being more open and honest, more transparent about what we're trying to accomplish, what we need to do that, and what the results will be for the measure we're advocating. Now if we can ever get the conservative Republicans to take on those characteristics that could produce some very interesting concepts, and in the process they would have to see that, basically, they are wrong about what they want to do, because it would not lead to a more just, more equitable society.

Second, when the capital gains tax was lowered a few years ago, we charities screamed, as we always do when Congress tinkers with the tax code, that donations would plummet and charities would be left high and dry. But, in the event, nothing happened. Donations didn't decrease, they kept on increasing, as they have done for the past 40 years or so. And now that the charitable deduction is proposed to be lowered to 28% from 35%, I doubt if this will make a difference in peoples' giving. Donors work around these things; they keep on giving, and they don't let a few points in the tax code prevent them from accomplishing their charitable objectives. Why?

First, because giving is from the heart. Those who want to give to charity, and are able, tend to go ahead and do that on a regular basis. The tax deduction is something of an incentive, but when donors are polled, it's way down the list. Only about 30% of donors acknowledge that the tax deduction is a motive for giving.

Second, because giving is from the head -- when the oxytocin runs, the checks get written. When people identify with those in need, they respond positively. So if we, as charities, are out there with strong, visual media promoting our case for support in compelling and motivating ways, we'll get those donations that are there to get. And as long as our boards and executives aren't afraid to invest in fundraising capacity -- and as long as fundraisers are out there forming and nurturing relationships with donors and prospects, then we're going to get the contributions we need to do our charitable mission.

The real tragedy of the situation is NOT that the President wants to lower the charitable deduction on those with incomes of more than $250,000. It's that the charities themselves are in panic mode, pulling back so hard and fast that they're destroying the ability of the professional fundraisers they employ to keep up those donor relationships that are so vital and that keep the donations coming. Boards and executives of charities in this area at least are running scared and cutting back on fundraising capabilty and infrastructure at just the time when it is most needed.

And there's good reason for many of them to be scared, too, because most of our more than 5000 charitable 501-c-3s in southeastern Michigan have not been doing their donor homework through recent years. They have not been out there forming relationships with donors, cultivating them, asking them repeatedly for their gifts and contributions to our various missions. The boards and executives, particularly in the thousands of small and mid-sized charities, have been stingy with their resources, failing to build good fundraising techniques and enlarge their pools of donors and prospects. We've been leaving a ton of money on the table by not getting out and asking anyone and everyone we see for assistance in charitable mission. It's not the President's fault; we've cut our own throats on this.

Consequently, as charities, we have no one else to blame but ourselves. I say leave the President to make the tax deduction decisions, and let the charities do a better job of applying the basics of fundraising on a day-to-day basis, so they can get the money they need to accomplish their charitable missions.

But there's another value at stake here, and along with it a better solution to the problem of taxing the wealthy. It is that we have, in essence, TWO tax codes. One for the wealthy and one for the rest of us. It's brought about by the disparity in the capital gains tax and the income tax. The wealthy may not have that much regular income. So if you drop the amount of the charitable deduction, you're not goin to net out that much income for the government to use. But the wealthy do have TONS of capital gains, and this can make up the lion's share of their income. And they are only being taxed 15% on those gains. Thus Warren Buffett was reported in the press recently as having said that his secretary is taxed more than he is!

So what to do? Mr. President, please just go ahead and forget about the charitable deduction, and please raise that capital gains tax to about 45%, OK? Now you're going to get some real money into the treasury, AND you're going to provide really wonderful incentives for charitable donations. Now the wealthy really have something to avoid. Charitable organization fundraisers could have a field day here and boost their nonprofit organization income significantly enough to take care of the great needs out there. At the same time, the U.S. Treasury will get a much bigger boost than it ever could with a paltry reduction in the charitable gift deduction.

Make sense? Sure. Unless you're wealthy. But then you have to figure that they elected to pursue money and try to get ahead of the pack in the first place so they could live better than the rest of us, so why shouldn't we, the pack, go after them in a big way!?

Voluntary Sector and Public Policy are a "Natural"

I had a discussion yesterday with a young man who is wanting to get into the fundraising profession from having been a business entrepreneur, also a history major at UM, graduated mid-1980s. We had a very interesting discussion ranging here and there through history and through the breadth and depth of the nonprofit sector. Parts of that discussion got me thinking, and my thoughts turned to "community." So today's diatribe has to do with how we all relate to one another in a multi-cultural, pluralistic society, the global community.

I'm thinking back to the roots of our democracy, and am being aware of the fact that the basic principles held by the Founding Fathers came out of the liberalism of the Enlightenment of the eighteenth century. And, in fact, two aspects of our life in this country had their origins in this philosophy: democracy and capitalism.

It is interesting to note that Enlightenment liberalism was based on the individual, and held the individual as the center of its thought. So we have economic principles based on what an enlightened person would do; we have democratic principles based on what (presumably educated) individuals will do, or what they need to do to have "life, liberty and the pursuit of happiness." And I have also seen "pursuit of happiness" translated as "property." Life, liberty and property.

Madison, for example, in dealing with "factions" in the Federalist papers understands the effects of individuals who happen to associate voluntarily with each other to do in their neighbor and profit at the neighbor's expense -- whether as persons or states. Hamilton had a few interesting things to say about individual states as factions within the larger colonial whole. The political arena is focused on individual states, or individual persons as the acting agents. The concepts of democracy do not necessarily fit well when it comes to groups or collectivities of people. We still think of them as individuals who happen to get together, but we don't think of them as communities that have some kind of integrity on their own. And we can see how this came out of a time when "collectivity" -- in terms of empire and church -- had become so completely oppressive as to subjugate and destroy the initiative and needs and aspirations of the individual..

Now we can see also how capitalism has evolved from feudal times. The feudal manor - the castle set amidst the farming community -- a symbiotic relationship. Then mercantilism -- the people of the countryside were the markets for the city, and the resources of the country focused on and were sent to the city, along with protectionism against traders from foreign city-states. Then colonialism, where the raw materials and resources of vassal states flowed to the colonial powers, and those vassal states were forced to purchase the manufactured goods of the colonial powers. "We'll take your raw materials, you'll buy our manufactures, and you cannot produce anything manufactured." I believe I recall that in the Chicago Freedom Movement we used to call that "plantation economics." To some extent, and J.W. Smith is very strong on this, the IMF debt structure for underdeveloped countries mirrors that economic tradition.

And then we can see how the Church, first Catholic, then Catholic or Protestant, cared for the basic community needs of mankind. Particularly in Catholicism we have the "religious communities" that were trying to be examples to the rest of the society on how we should live together as human beings, expressing the "community" nature of our psychic makeup In fact, early on in the development of the Holy Roman Empire, we can see government and church each struggling to gain the advantages of state and the advantages of community for itself. The church striving to take over the state, the state trying to preserve its integrity over against the Church and community. Another by-product here is the unfortunate fact that Protestantism neglected to carry with it anything that approximated the religious communities, and so was caught up in the web of thought and activities focused solely on individualism.

We can see that there is a need for governance for the people, someone to organize the resources, focus the resources on getting the people what they need to live. The state focuses on keeping enemies at bay, providing protection, providing administration of common concerns, such as crime, crop failure and famine, maybe disease control And we see the need for community -- getting together, being social animals, voluntarily associating together to do tasks, celebrate life, create moral underpinnings, ethical behavior, socialization of the "natural animal" in all of us. The church used to take care of this -- still does for those that believe. Up through the "Ike" generation there were strong elements of "Victorianism" that held the moral center together. But no longer today in a secular, multi-cultural, pluralistic society.

So here we have these two ideas brought together: democracy and capitalism. Individuals acting on their own behalf both economically and politically. But what we're lacking now is a sense of community -- or, more exactly, a "system" to deal with our life together -- particularly within a highly diverse, pluralistic society. When the church commanded everybody to worship the same way, the community was firmly in its hands. In a pluralistic society this cannot be the case. Yet we do need some "group" or "community" principles to guide everyday interactive behavior, whether in person or on the Internet. Democracy supplies the system for our governance; capitalism provides the means for bread, but what about the means of gathering together. I'm thinking of mores, ethical behavior, politeness (if you will) or the principles that guide every individual in social as well as civic conduct. Reining in greed, avarice, fear, distrust, hatred, flight and fight.

In the last half of the 19th century and into the first several decades of the 20th century, we had three related but distinct movements that tried to fashion systems that would bring together government and community. We had communism, socialism and fascism. Each was tried in many forms and instances. Each has failed. Was it the problem of trying to combine "community" with "governance"? Or was it an error in judgment about how to fashion communities in ways that meet human needs as individuals and human social needs? With communism you have the collective, with fascism the state as the primary "community." In one you toil with everyone else -- community is defined as those who labor together. In the other, we are proud to be people of a nationality, a country, a nation, a state, and in that we find our identity as the state shapes both conduct and destiny.

Whatever the problems and reasons for failure within communism, socialism and fascism, we are left today without an adequate set of principles for how we conduct ourselves as groups, or communities. So, for example, there is much within capitalism that promotes itself to individuals. But nothing that puts a cap on the pursuit of individual greed, the bent for injustice, the desire to make war on other people(s), the propensity to "grab" what the other kids in the sandbox have for one's self.

So how are we going to deal with this? In terms of government structure, the Founding Fathers, Madison included, found a way to deal with factions: we need to preserve liberty while defining boundaries for behavior. So we have, as part of government, a system of civil laws and penalties. But this doesn't really address the issues of "community" that involve arenas other than the ways we would do actual harm to each other. It doesn't, for example, address civility, manners, ethics, morality. It provides no guidelines for these, leaving it up to the individual to sort these things out according to individual beliefs. Again, the roots of Enlightenment liberalism are evident here. So we see the limits of this philosophy.

Yet we very much need something relating to "community" as we find ourselves in an increasingly globalized situation. We have a democratic system of government, we have a capitalistic system of economics. But what governs both the governors and the businessmen? What directs systems of legislation in ways that are more just, more human, more appropriate for society in which diverse peoples live peacefully together? What is it that governs and provides limits to the entrepreneurial spirit when it hitches its wagon to the star of incessant greed?

I am thinking we are in need of something here that government cannot provide, by the very nature of the constraints placed upon it, and that business will not provide, by virtue of its limited understanding of humans as solely economic beings. And where I am looking for "that something" these days is in the experience, the traditions, the sensitivities, the many impacts on society that the voluntary sector provides us. And I'm thinking that formation of national, state, or local public policy needs to be a three-way pursuit of government, business and the voluntary sector, working more ostensibly, and in a more structured way together, not just a two-way pursuit between business interests and government. And one of the chief and compelling reasons why I think this could work is that government and voluntary sector organizations have in common a value that business does not have: namely, the value of acting on behalf of the good of society -- the compulsion to make society continually better, more whole, more just, more peaceable for all citizens. Government has it in terms of what majority rule can bring. Nonprofits have it in terms of caring for all those who must, by virtue of circumstances or choice, stand outside the ruling majority's situation and decision.

So this is why -- in the name of and for the sake of "community" values -- that I would advocate for a distinct and recognized place at the public policy table for voluntary and nonprofit organizations. We tend to have the history and background, the skills, the diversity of experience over centuries, that bring more human values, more community-oriented values to the fore, and thus we are an appropriate complement to both government and capitalism in the fashioning of public policy.

Getting Some Good done for Society

My thought today is that there are two ways to get some good done for society: We can either let the greed and egos of the business sector get us into such a terrible fix that we then need the governments around the world to bail out both the businesses and the rest of us, or we can bring our nonprofit organizations to the public policy table and let that set of values, history and expertise have a prominent role in setting the national political agenda.

Obviously the political parties aren't capable of doing society good unless they face a dire emergency. Here we are, having let the greed and speed of the financial community get the entire world into an economic depression, just so we can get some road and bridge construction, and some attention and serious money put behind the emphasis on a "green" environment and on our contry's education system. What's wrong with these values? Do we have to let ourselves come this close to total economic disaster in order to get some good done in society?

In other words, the banks and brokers, the short-sellers, the insurance companies and the runners of hedge funds are now responsible for getting us highway repairs, returning our focus on education and to such matters as the global warming effect? Well, thank you very much... I think.

All that greed and ego brought on a worldwide depression, and so now governments around the world are massing billions and trillions of dollars to get us back where we belong -- to a stable and preferably democratic economy. Is this the only set of solutions we can create? Is this the only way we can force political attention and focus financial resources on our basic infrastructure, our education and other values the help society and move it forward? Is it impossible for us, as Americans, or as world citizens, to do this voluntarily? What's wrong with this values picture?

Shame on us, as human beings! for letting greed and our warlike nature get us so far from caring for and maintaining the society in which we live, and from putting into place and maintaining the systems and the knowledge that we so urgently need and use daily. Surely there must be a better way?

Well, I'm here to say that there is a better way. In fact, there's a whole sector out here that the politicians and business tycoons are deliberatly and consistently ignoring. They call us the "nonprofit" sector, because they don't know how to think about us; they can't imagine that people would actually benefit by giving away the commodities of time and money just in order to do society some good. It's apparently beyond their imagination!

But, here we are. The Voluntary Sector. The Commons. We represent all that we have and hold together as members of the human community. In the U.S. alone, we have more than two hundred years worth of experience bringing a whole variety of good things to our society. We represent about 12% of the nation's GDP and employ about 12 million people in our charities. Around the world, the voluntary sector is growing as well. People in all countries, under a whole variety of political conditions, find it efficacious and rewarding to give themselves to others in ways that positively impact society.

And you know what we get out of it? We get internal satisfaction, meaning for our lives, the thanks and approbation of our peers, and a sense of real and significant achievement. These are the rewards of the voluntary sector. These are the rewards that build human beings in the best possible ways. It's not how much "stuff" you have or how much of the world's resources you amass for youself as protection against having to be in the "great antheap" of humanity and suffer what we all suffer. IT's doing things for other people. Because when we do that, we, too, are benefitted. All that profit doesn't mean a thing; when it all comes right down to it satisfaction is obtained by giving one's self away to others. That's how human beings are hard-wired. If you don't believe that, thsn look at the discoveries that are being made regularly these days in neuroscience and biochemistry. We're learning academically what the sages of old have told us for thousands of years: it's not how much gold you have, but how much you give away that brings satisfaction and contentment.

So what is this that we of the voluntary sector can't be invited to sit at the public policy table with the politicos and the entrenched money interests and try to help focus away from greed and ego and get on with life that brings benefits rather than recession to our people? It doesn't make any sense that business lobbyists get their way with congress while our representatives systematically exclude the voluntary sector from participation in setting the nation's policy agenda. Neither does it make sense that we should sideline the processes that make society better in favor of making a few individuals wealthy beyond all imagination. What kind of goal for society is that? Our values as a society are really screwed up if that's all the better we can do.

For a start, why don't we think about the fact that there are some things that don't belong to just whoever happens to have the capital to bring them to market. There are some parts of our society that belong to all of us. They should be treated differently than gadgets and widgets because we all have a stake in them, we all need them for survival in the twenty-first century. These constitute The Commons -- that which we all hold together. Business, and the markets, should not be the ones that determine how The Commons is run. There should be no profit in it at all. Elements of The Commons should not be run and governed by the profit motive. That which we all hold in common should be run by our "nonprofits" or the voluntary sector in partnership with government.

What are we talking about? Our air, our water, public transportation (rail, auto and air travel), food, shelter, education, health care. These are needed by every one of us for llfe, liberty and the pursuit of happiness. They should not be treated as commodities, but should be made available to all. Business interests should not be allowed to foul the air and water, or ration our knowledge and education system, or our system of health care, on the basis of who can pay the most. Business, especially the insurance companies, should be driven from the health care system completely. Housing and food should not be run by the markets without significant regularion, strenuous oversight and public ownership.

In their place, the voluntary sector should be employed to provide these elements of The Commons to everyone in the society, under conditions that do not make anybody in the society poor or wealthy. It is the independent sector that has the history, the set of values, the experience to deal with The Commons. We need to find a way to de-couple government and business, and then bring forth a new partnership between government and the voluntary sector.

Look at the similarity in values. The values that are incumbent on government and those of the voluntary sector are so much more aligned than the values of government and those of business, markets or profit. If we created a firm and stable partnership between the independent sector and government, we might actually develop a society that is kind to its citizens, provides a safe, secure, stable environment in which to bring up our families, raise and educate our children and find meaningful life's work. There are ways to do this, and we need to get out of old, outmoded ways of thinking, put business in its proper place so society can prosper.

More in the next post on how we can do this.

Nonprofit Impact on World "Plunder by Trade?"

Well, this has been an interesting week. The best part, however, was reading about Mr. Obama relaxing with family and friends in Chicago over this long weekend. It's so great to understand that we have "one of us" in the White House at last. Here he is with friends in Chicago, playing basketball, watching the tournament on TV, eating in familiar restaurants, etc. It's just so folksy and "real life" in the sense that any of us might be doing the same thing. It's a real symbol of identiification with the people in the country. Getting out of Washington and being with "real" people must be refreshing for the Obamas and is also good for the rest of us just to see that this is happening.

Thr first of four inputs to the week was the comment in the NY Times for yesterday (Sunday): the banking crisis boils down to the fact that the largest banks simply have a mound of debt on top of which has been placed a pile of worthless securities. Maybe the time has come to really let the American people know just how dreadfully serious this whole thing is.

The guys who were supposed to be keeping the money safe were gambling it away trying to make themselves personally rich. But the most disturbing thing to me is that we don't seem to be able to mete out the necessary punishment for these guys. This I don't understand. I have written numerous times to Dingell, Stabenow and Levin, but outside of a couple of days of questioning by Congress, these bankers are getting away with murder. And what they're killing is our banking system.

One of my other inputs this week has been to read a most interesting and fairly technical book setting forth the research of Claudia Goldin and Lawrence Katz on the premium of a college education throughout the period of 1915 to 2005 in the United States. The title of the book is "The Race between Education and Tecynology" published by Belknap Press of Harvard Univ, 2008.

Basically, what the Goldin/Katz research boils down to for me is this: that up until the 1940s advances in technology consistently and gradually pushed up the level of education necessary to get jobs that paid middle-class wages. By and large, the number of people needed by increasing technologica advances in the workplace were available to be hired, as America benefitted from the land grant colleges and universities and went through the "high school phenomenon" that made it culturally mandatory to get a high school educaiton through those years. The differential between those with and those without a college degree was marked, and the premium of a college education outpaced that of a high school diploma.

Then WW II and strong unions, plus huge numbers of women in the work force, plus the GI Bill that gave higher education to so many, helped the number of people with college degrees (high skilled workers) increase to the point where they were pulling ahead of technological advancements. The premium on a college education went down a bit in this post-war years. But then technology began to pull ahead in the 1960s and 1970s and the premium of a college education increased.

But then in the 1980s to the present, a lack of emphasis on and funding for college and university education once again slowed down the number of highly skilled people available for the jobs that needed their expertise. That slowed the premium of a college education. And this is where we are now -- that we don't yet have an adequate supply of well-educated people to fill the jobs created by advancing technology. I'm not a political scientist, but my thought would be that this is yet another result of the Republican public policy shift to downsize government and place responsibility for doing social good on the backs of those who would choose to donate to it and fund it voluntarily out of the goodness of their heart. And, of course, there's not enough money (only about $300 billion a year) to get all those jobs done that need to be done, through voluntary contributions from the public.

The third input I've had this week has been my research into poverty -- in the world, in our nation, and in Michigan and Detroit. I'm doing this as part of putting together the Case for Support for a new campaign by a new client to increase their capability to handle the tremendous influx of poverty-induced problems faced by the people of the urban areas of southeast Michigan.

The state of our country, with regard to those who have low or no incomes is shocking! Much more than I remember in the 1960s and 1970s, and we thought it was bad then. It's a national disgrace the 15% of our people live below the poverty line. That this gap between rich and poor is widening at an incredible pace. That the gap is not just local, but national and worldwide. I'm sure you probably know the statistics better than I do, so won't include those. But they're completely shocking.

And then the fourth input for the week, also a result of my research on poverty, was the discovery of an economist and his several books over the last decade, all under the banner of "economic democracy." The author is Mr. J.W. Smith, who is described as a independent economicst with a PhD in political economics from Union Institute and University in Cleveland. He heads an outfit called the Institute for Economic Democracy. Have you ever heard of it? He espouses a more cooperative and democratic capitalism and claims the world is in a cycle of "plunder by trade" and is therefore locked into a cycle of violence and war.

The basic premise of his latest book "Economic Democracy: The Political Struggle of the Twenty-First Century" 4th ed. 2005, is that we have now extended the practices of colonialism to all the under-developed countries of the world. We have done this, he says, by using trading superiority to raid and plunder one country after another.

How this works, he says, is that we take out the natural resources of a country and then force them to buy our finished products, rather than giving the people of each country the means to turn their own raw materials and resources into finished products for export. England did the same to India and, for a time, to the American colonies.

Now we do it, in turn, on a global scale. He has harsh words for the U.S. and the IMF and the World Bank. He says that how this works is that we (wealthier companies and nations) see natural resources in the Third World that we need, and we understand that if those countries developed their own resources and had their own industrial capital and processed their own resources into consumer products, that we could not compete successfully with them. They could demand full value for their natural resources while simultaneously underselling the current developed world on manufactured product markets.

So the wealthier companies and nations set the rules, shape international institutions and influence communication in ways that shape trade in ways that are disadvantageous to the developing countries. Whether we support a dictatorship or a fledgling democracy, we make it hard for developing nations to break out from poverty, or to reduce dependency from the US or the IMF or the World Bank.

Smith says, "The Thirdl World remains poor because the powerful strive to dominate every choke-point of commerce. One key choke-point is political control through the 'co-respective' support of local elites." "If a government cannot be bought or otherwise controlled, corrupt groups will be financed and armed to overthrow that government." He calls it "plunder by trade" rather than "plunder by raid" as in the old colonial days. Societies and nations are caught in the trap of unequal trade. "Once unequal trades are in place, restructuring to equal trade would mean the severing of the arteries of commerce which provide the higher standard of living for the dominant society and collapse of those living standards would almost certainly trigger open revolt. So to forestall such restructuring to equal trade, the wealthier nations talk in terms of "national security" and "defense." Thus the world is trapped in that pattern of unequal trades today."

So, putting all these inputs together gives an interesting and somewhat depressing picture.
1. Our domestic public policy has allowed education to fall to near the bottom of national priorities, so that the gap between rich and poor is widening (Detroit high school graduates don't have the skills to get the jobs that might provide wages and salaries that could help them climb out of poverty).

2. Internationally, we are plundering other nations' raw materials, while encouraging them to purchase our finished goods. We encourage privatization and reduced protection of domestic industries in poor nations (and impose similar restraints on people in areas like Detroit at home).

3. We loan the pooorer countries money and then impose conditions that force those countries to export more raw materials in order to raise enough money to pay off their debts (and we have "welfare to work" policies that force people to take low-wage, high energy jobs that don't permit or encourage and supplement people to obtain an education that could help them obtain better jobs).

4. So resources from the poorer countries become even cheaper, which favors consumers in the West (and we promote a culture that demands consumption of commodities, rather than promoting a culture that supports and demands education for all people here in our area).

Smith describes this as the "spiraling race to the bottom." And then I'm reading about the statistics and conditions that describe "the bottom." Whether in Detroit, or in Mauritania or Mozambique or wherever, we have set up the conditions that keep poor people in poverty, and keep them becoming continually poorer. It's the result of economic plunder.

These are basically the same issues -- a little different teminology, but the same basic concepts -- that we were demonstrating and working against in Chicago during the "Freedom Movement" there during the late 1960s. "Daley politics, and Daley economics" were our daily fare. "Plantation economics" was what we experienced on the west and south sides of Chicago.

My question is, what is it that nonprofit organizations serving the needs of the poor can really do that is other than paliative? What ways can we start chopping away at the huge, strong roots of this giant "plunder-ty-trade" weed that has captured 37 million Americans and about 2 billion people -- one third of the world's population? Are there any ways that we can gather together, or structure ourselves, to begin to create any kind of serious damage to this system that fosters and thrives on isolation, separation and the gap between rich and poor? Is human greed and selfishness, as expressed in huge conglomerate companies and in world-leading governments controllable? Do we really have no alternative except to put up with this? I found the website of the Global Call to Action Against Pocerty (GCAP) very interesting in this light: