Cre8tive Philanthropy

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Investment and innovation in the for-profit social impact community.

Business and Philanthropy: Integration and Collaboration

Business and philanthropy, when used together in a sentence, usually evokes images of successful business people (Bill Gates, Oprah Winfrey) who are well-known philanthropists or stodgy corporate giving programs created more in the name of marketing and promotion than serious goodwill and intention to give back. Business and business people have generally been stereotyped as individualists with somewhat blind ambition toward singular goals, typically profit and production – not philanthropy.

That’s changing. Many of today’s business professionals have more altruistic purposes, for both work and life. They strive to contribute their time, energy, and skills in creating better communities. In step with this natural evolution and synthesis of passions and skills, the next generation of business owners and professionals are keen to have impact in all areas of their lives, and see little distinction between what have traditionally been separated as  business and philanthropic spheres.

What better place to look for this shift than the demand for social entrepreneurship and philanthropic courses at university business schools in graduate and undergraduate programs. A recent article in Bloomberg Businessweek highlights the growing interest in these programs. 

Nonprofits and philanthropy may have, at one time, been viewed as quite different from business. However, purpose and mission are only a matter of viewpoint and execution. Rather than separation and alienation based upon profit/nonprofit, perhaps the viewpoint of integration and collaboration is in order. This leads to the concept that there may be a wide spectrum between pure purpose and pure profit, with everything in-between.  The wisdom lies in application; what problem is being solved? What is the best way to solve it?

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Filed under: Giving, Innovation, Philanthropy, Uncategorized

Foundation Flat Tax Proposed

Last month Rep. Chuck Schumer, D-N.Y, proposed a 1.39% flat tax on all foundation investment earnings. The offset would be a lower age, from 70 1/2 to 59 1/2,  for the provision that allows $100,000 tax-free transfers from IRA’s to charitable causes. Additionally, private foundations would now qualify for the tax free transfer, whereas they are currently unqualified.

Private foundations are currently subject to up to a 2% tax on investment earnings but are provided exemptions if their charitable giving reaches certain qualifying amounts. The flat tax would require a tax be paid regardless of their donation levels.

The key question: would this legislation suppress the amount of money going to non-foundation charitable causes? If foundations don’t have an incentive (through tax policy) to give at higher levels, will they? Is the proposed flat tax a tax on wealthy citizens’ private foundations or a tax on charities? What is the likely outcome? How will such a policy impact behavior?

Filed under: Charitable Tax Laws, Foundations, Giving, Philanthropy

Activists criticize Gates Foundation securities holdings

As someone who provides impact investment research and consulting services, this blog post on The Chronicle of Philanthropy is fascinating. Investments made by philanthropic organizations are generally more public, and therefore, more open to criticism. Explicitly, this post speaks to the ethical question of whether or not the foundation’s agriculture work in Africa will be used to help create markets for Monsanto’s GM crops. (More details between the relationship between the foundation and Monsanto but that almost smells of self dealing and conflict of interest.)However, there is an underlying tone: Why is a “good” foundation  investing in a “bad” company?

Since charitable and philanthropic organizations are sometimes perceived as ethical beacons, it is assumed their actions will reflect this commitment to “good” and “right” that serve to improve society and the world. Perhaps that is why foundation investment in a questionable company can cause uproar. Foundation assets are, by their nature, linked to their purpose – the money is there to serve that purpose regardless if it is corpus or grant.

For that reason, charitable and philanthropic organizations should be aware of what their investment say about their commitment to their purpose; not for the public’s sake, but for genuine belief in their mission and goals. Every foundation investment does not need to be socially responsible, but there should be a “negative” screening of investments that are out of alignment with the foundation’s core purpose.

Filed under: Challenges, Foundations, Philanthropy

Donor Advised Fund: Help or Hinder High-Impact Philanthropy

Today it was announced Harris, a bank, broker-dealer, and registered investment advisor firm, has launched a donor advised fund (DAF) in partnership with National Philanthropic Trust. DAF’s can provide donors anonymity, current year tax benefits, and consolidation of their philanthropic dollars. Yet, under the terms of DAF’s, donors lose a margin of control over their assets. As stated specifically in the Investment News article “donors themselves can express their grant preferences, but cannot require that donations go the charities they designate.”

So while DAF’s may increase philanthropic resources, it actually creates distance between the donor and the charity, and potentially the charitable purpose, making philanthropic giving more of a transaction than a meaningful interaction. Research conducted by Hope Consulting indicates this method of philanthropy is at odds with donors typical reasons for giving. Additionally, arm’s-length philanthropy does not generally allow for inter-generational or community building philanthropic activity.

For the most part, everyone cheers charitable gifts and giving. Yet, let’s not forget the greater reason for giving; it not just the gift, but the intent and the heart that means most.

Filed under: Giving, Philanthropy

Technology Review at MIT: Q&A with Bill Gates

Interesting interview with Bill Gates touching on topics of giving, global philanthropy, and clean energy innovation. Sourced via NYT Dot Earth blog post by ANDREW C. REVKIN.

Filed under: Philanthropy

Obama’s charitable deduction reduction back on the table for 2011…

Many givers of time and money do so because they care about a cause, not for the tax breaks. Yet, it is unclear, particularly in a time of dwindling resources, rising taxation, and a challenging economic environment, what would happen to charitable gifts should the charitable tax deduction become less favorable. Some believe it’s not so bad, others think it is irresponsible.

New York just passed a law limiting charitable deductions for its wealthy. Perhaps the Obama administration should see how the changes in NY play out before gambling with the health of the nation’s charitable sector.

Filed under: Challenges, Charitable Tax Laws, Philanthropy

Bullied into Philanthropy

The SF Chronicle offered this piece as a brief on billionaires who have not signed the Giving Pledge. The Pledge has received press of every variety: opinion pieces, debates, challenges, praise – you name it. To add to the list, the Chronicle article seems to… well.. Bully. Not outright, of course. Yet, publicly listing those who have not signed, regardless of their other philanthropic activity (which, to the article’s credit, is discussed) creates a stigma, a sort of social or peer pressure. “Bill Gates has done it, why aren’t you?” “Warren Buffet has given this much! Why haven’t  you?”

Those of lesser means may perhaps feel justified believing those with great financial means should be givers, and generous ones at that. It is easily argued that we should all give. …Ok. It is hard to disagree. However, from that perspective all charitable giving, regardless of intent, is good giving. And charitable giving is not necessarily philanthropy.

IS charitable giving good by its nature and not by its intent? Is corporate responsiblity done for PR as good as authentic and genuine corporate stewardship of the environment or community? Can and should we pressure in order to get others to give?

Upon inspection, peer-pressured giving does not seem in alignment with the passion and compassion that is the core of philanthropy. Giving, of time or resources, is deeply personal. For some, it is a rather spiritual experience of giving part of one’s self to bond with another. To give without intent or purpose takes the soul out of the gift and reduces it to a transaction. If philanthropy became a one-time, “here you go” exchange, the world would not be better for it.

Filed under: Giving, Philanthropy

The Philanthropy Paradox II

Within his thought-provoking article, The Philanthropy Paradox, Rajni Bakshi suggests the giving pledge of billionaires stands in stark contrast to the current economic distress of the middle class as both are representations of capitalism within American society. Coded within a question, a bold statement is made: Philanthropy is a challenge to economic democracy.

He illustrates well his basic argument that more power should be given to “the commons”, that the middle and working class can only achieve equity through economic freedom.  He gently suggests the efforts of billionaires should, therefore, be focused to that end, rather than amassing profits and then distributing their charitable dollars.  Therein lays the paradox; while the philanthropy of the ultra-wealth provides needed social benefits, their wealth is the true challenge to economic democracy.  In another context: why teach a man to fish when all he really needs is his own pond – or at least not let other men have too many ponds. Instead of philanthropy providing education and the opportunity to advance, why not encourage the wealthy and powerful to focus on changing the rules to include wealth distribution and economic democracy?

He goes on to describe the philanthropy of the Gates Foundation as “welfare activities” and criticizes the attempt from businesses to improve social conditions as “an approach that treats inequity as a business opportunity.” Not to burst anyone’s utopian bubble, but either via philanthropic investment or business investment, a purpose to improve the social conditions of society by its nature is promoting economic democracy, and the simple act of freedom anyone has to direct their resources, particularly for investment, supports economic democracy.

There’s no doubt that many of us would agree that we need better solutions to some of society’s pressing problems, but simply re-writing the rules to include more equitable wealth distribution would diminish opportunities, stifle innovation and risk-taking, and generally create greater societal tensions and new problems. 

When tackling the paradox, examine that each billionaire has their own story, that few have played a dirty game, and that many have gained their fortunes due to creating and building something of value to, or wanted by, society. Many modern-day ultra-wealthy have not made gains by exploiting commodities, but rather on the back of talent, drive, creativity, and innovation. To demand the rules be changed to make the world more “equitable” would leave these individuals without their freedom and opportunity, and leave the rest of society without the benefit of their talent and labor.

Philanthropy, then, is their re-investment into society. The only criticism may be of philanthropic execution or intent. The same can be said of business. It is not the game, but perhaps the failing of the players that is the problem.

As an end note, it is wise to suggest that true democracy and freedom require true responsibility and accountability, from each member of society. Many philanthropic efforts and activities underway in the world today have undertaken tremendous responsibilities in ensuring the freedom, happiness, and well-being of others. Perhaps for that reason, it is called Love of Humanity.

Thank you to Rajni Bakshi for your attentive thoughts and sharing your perspective with the world. When each of us speaks our truth, we are all able to come closer together.

Filed under: Challenges, Giving, Innovation, Philanthropy

Philanthropy Paradox? The discussion gets interesting…

Rajni Bakshi offers this passionate and thoughtful piece on what is, in his mind, the Philanthropy Paradox. His ideas are provoking , and potentially controversial. For anyone interested in shaping the path of new philanthropy and our culture as a society, it is a worthwhile piece to read – perhaps twice.

Anticipate a thorough response to his argument on tomorrow’s post. A considerate and worthy challenge to his premise requires the midnight glow of a laptop uninterrupted by the phone calls, appointments, and emails of the daylight hours. Till tomorrow!

Filed under: Challenges, Giving, Philanthropy

Billionaires Commit to Philanthropy

Mr. Buffet and Mr. Gates have been busy over the past year, and it’s paid off. They have successfully encouraged other billionaires to sign on to the Giving Pledge. More info on the WSJ and this blog post on Tactical Philanthropy.

Filed under: Giving, Philanthropy

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