American Idol blew it

American Idol did good, but it could have done a lot better.

“Idol Gives Back,” the three-hour celebrity extravaganza that aired April 24 and 25, raised over $60 million for poor children in Africa and the U.S.

How big a deal is that?

The Jerry Lewis Telethon, a dinosaur compared to American Idol’s high-tech glitz and celebrity star-power, last year raised even more, just over $61 million, with a fraction of Idol’s self-promoting hype.

And as The New York Times reports, with a 30-second commercial on Idol costing $745,000 according to Forbes magazine, Idol parent News Corp.’s $5 million donation amounted to less than five minutes of advertising time.

American Idol says a record-high 70 million votes were cast for its contestants after the April 24 show.

If it had asked viewers to donate just $1 for every vote they cast, Idol would have raised $70 million from viewers alone.

But because the more than $60 million it did raise includes donations from American Idol sponsors and its parent News Corp., Idol Gives Back actually generated much less than $1 for every vote cast.

The average U.S. household gives $1,620 a year to charity, or nearly $4.50 a day.

How much did the average viewer give to Idol Gives Back?

We don’t know because, while it was anything but shy about plugging its own generosity and that of its sponsors, Idol has been downright mute about how much its viewers and sponsors actually gave.

In addition to the dollars it raised, American Idol also raised a lot of awareness about the plight of poor children, and about some of the charitable agencies working to address their needs.

That’s all good.

But American Idol and its parents, Fox Broadcasting and News Corp., could have done a lot more to promote the cause they were supporting, explain how much viewers and sponsors actually contributed, and disclose how much it cost to raise all that money.

Instead, sticking to the show-biz formula that has made it the most successful show on television, American Idol used its 180 minutes of prime time last week to shamelessly promote itself, its cast of judges and its “generous” sponsors without providing any details about how its philanthropy actually works.

If Idol had invested more time and effort to raising as much money as it could through Idol Gives Back, it might have made more effective use of its sponsors’ donations.

It could have asked its sponsors, for example, to pledge to give a specific amount of money for each vote cast for contestants or for each dollar contributed by viewers who voted, or both.

Idol also has failed to disclose details about the cost of raising the more than $60 million it says Idol Gives Back generated.

While Idol says over 70 million votes were cast, for example, Fox has not explained how much money was charged for each wireless or text-message vote.

Throughout its two-night broadcast, Fox continually touted the generosity of its sponsors, including AT&T, Ford and Coca-Cola, but it never has disclosed how much each sponsor contributed.

While the two-night show featured frequent video clips of host Ryan Seacrest and judges Randy Jackson, Simon Cowell and Paula Abdul visiting poor kids in Africa and the U.S. and waxing emotional over their plight, Idol has not said how much their stars’ trips or the production of those clips cost.

The roughly 1 million charities in the U.S. work hard to raise money, and a key metric by which they are judged involves their cost of fundraising.

But Idol has disclosed no metrics by which to assess the efficiency of its fundraising.

Fox and News Corp. constitute a mega-brand and franchise, and while Idol Gives Back did some good for poor children, the main cause it championed was American Idol.

If American Idol truly cares about philanthropy, it will need to be a lot more up-front and open about the cost of practicing its charity and how much its sponsors actually gave.

Nonprofits must engage volunteers

Volunteerism in the U.S. is declining and eroding, and nonprofits need to find ways to better engage and retain volunteers.

As PJ reports, those are the challenging findings of a new study by the Corporation for National and Community Service.

While 61.2 million adults representing 26.7 percent of the population volunteered in 2006, time worth $150 billion, the study says, the number of volunteers fell 4.2 million from the previous year, when adult volunteers represented 28.8 percent of the population.

Equally troubling is the study’s finding that 20.9 million of the 65.4 million adults who volunteered in 2005 did not volunteer in 2006.

“While the good news is that most volunteers choose to continue volunteer, the dramatic cycling of people in and out of volunteering reinforces the fact that volunteer management is critically important and that creating positive volunteer experiences is key to growing a widespread culture of service.”

It also is good news that volunteer rates among young adults ages 16 to 19, mid-life adults ages 46 to 64, and older adults all have been increasing significantly over time.

And the study notes that the Higher Education Research Institute reported recently that the percentage of student entering college who believe it is “essential” or “very important” to help others in difficulty climbed to a 25-year high in 2005, and then grew slightly in 2006.

Americans are willing to give their time to causes they care about.

But if they expect to attract volunteers, and the money, know-how and connections that often flow from volunteers, nonprofits need to work a lot harder to understand the role that volunteers want to play, engage them in ways they find meaningful, and treat them as valued and integral members of the team.

Nonprofits, many of which seem to believe that engaging donors requires no more than an annual volunteer dinner and service pin, need to overhaul their organizational culture and begin to treat volunteers for what they are -- the vital heart of the voluntary sector.

Community foundations making markets

Community foundations are growing rapidly and poised for leadership.

Creating a marketplace that connects donors and nonprofits, community foundations are enjoying the most rapid growth in organized philanthropy.

Last year, according to a new report on foundation giving by The Foundation Center, community foundations’ assets and giving grew faster than that of independent and corporate foundations.

Giving by community foundations grew an estimated 13.2 percent to a record-high $3.6 billion, the report says, compared to growth of 11.7 percent in giving by foundations overall.

While they represent 1 percent of all foundations, community foundations account for nearly 9 percent of all foundation giving.

Assets of community foundations grew 15 percent to a record-high $44.6 billion, compared to asset growth of 10 percent to 12 percent for foundations overall.

And new gifts from donors to community foundations grew 44.8 percent to an all-time high of $5.6 billion.

The boom in gifts to them and in their assets and giving reflect efforts by community foundations to operate and market themselves more effectively, particularly to professional advisers like lawyers, accountants and financial planners who work closely with wealthy clients.

But a growing number of community foundations also are playing an increasingly vital role in raising public awareness about local needs and issues, convening local citizens and groups to talk about addressing those issues, and connecting donors with causes they care about.

If they can operate effectively and openly, and engage nonprofits and donors in an inclusive and responsive marketplace for the exchange of philanthropic resources, community foundations can serve as a hub for civic engagement and charitable giving to address critical local needs.

They also can play an increasingly vital leadership role in a society that is crying for leadership in the face of escalating social problems.

Tougher rules needed

The time is ripe for federal regulators to tighten rules on donor-advised funds and supporting organizations.

Charged in the Pension Protection Act of 2006 with studying both types of funding vehicles, regulators can take important steps to reduce the risk of abuse.

In comments filed with the Department of the Treasury and the IRS, the National Committee for Responsive Philanthropy recommends donor-advised funds be required to provide full and timely disclosure of their grants and investments.

The watchdog group also calls for eliminating Type III supporting organizations, which are not subject to the 5 percent payout requirement that applies to private foundations -- and which the National Committee says have the greatest potential for abuse.

Supporting organizations must provide financial or programmatic support to a beneficiary organization, which exercises some operational control over the supporting organization.

The National Committee also calls on the Treasury and IRS to ask lawmakers to subject donor-advised funds and supporting organizations to the same payout requirements as private foundations.

“With less overhead, less ‘process’ to their grantmaking and a comparatively low administrative ‘load’ charged by their fund managers, donor-advised funds should easily be able to make a 6 percent payout for each individual fund as well as cumulatively,” NCRP says. “Using supporting organizations to warehouse charitable funds does not further the interests of the nonprofit sector or the public at large.”

The watchdog group also says that, because donor-advised funds and supporting organizations “operate as the equivalent of foundations that accumulate billions of tax-exempt funds,” both types of funds should be subject to excise-tax payments.

Proceeds from those taxes support oversight and enforcement of accountability rules by the IRS and state regulators.

The recommendations by the National Committee for Responsive Philanthropy are most reasonable and long overdue.

With trillions of dollars expected to go to charity through the unprecedented transfer of wealth beginning to flow between generations, the rules governing charitable tools like donor-advised funds and supporting organizations need to be clear and effective antidotes against abuse, mismanagement and wrongdoing.

Rather than serving as a license to hoard charitable funds and exercise the virtually unchecked influence that control of those funds generates, tax-exempt status should require management of donor-advised funds and supporting organizations that is open and responsible and invests a fair share of the funds to support charitable causes.

Foundations should do more

Organized philanthropy in the U.S. is booming, a growth spurt that should spur foundations to pay out a bigger share of their assets in the form of grants, provide more operating support and become more active shareholders.

Thanks to a healthy stock market, an increase in the number of new foundations and in “pass-through” foundations by younger donors, and the formation of operating foundations by pharmaceutical firms, giving by the 71,000 grantmaking foundations in the U.S. grew to $40.7 billion in 2006, up 11.7 percent, according to a new report by the Foundation Center.

Foundation assets grew 7.8 percent in 2005 to a record-high $550.6 billion, according to the Foundation Center, which says the U.S. is experiencing a “golden age of philanthropy.”

But foundations are not sharing as much of their wealth or spending or investing it as effectively as they could.

Foundations continue to fight proposals for an increase, from 5 percent currently, in the share of their assets they are required to payout in grants and overhead.

And as a recent report from the National Committee for Responsive Philanthropy concludes, foundations are falling woefully short in the level of the critical operating support they provide to nonprofits.

And far too few foundations have been willing to use their assets to try to use their investments to try to bring the policies of companies in which they invest more in line with their philanthropic mission.

While foundations may indeed be enjoying a golden age, too many of them are hoarding their gold when they should be using more of it to support and strengthen the effectiveness of nonprofits.

Google finds disturbing charity gap

A new study commissioned by Google.org reinforces a disturbing and often-ignored truth about charitable giving in the U.S.

While most Americans who give to charity believe most of their donations help those most in need, the study says, less than one-third of giving by individuals in 2005 actually helped people who are economically disadvantaged.

The study, conducted by the Center on Philanthropy at Indiana University, also found that only 8 percent of donations provide basic necessities for the poor, with another 23 percent, at most, addressing the needs of the poor.

In an opinion column on the study in today’s Wall Street Journal, a Google executive also reports that people earning over $1 million a year give only 4 percent of their donations to address basic needs, and another 19 percent to other programs serving the poor.

And giving by individuals, particularly wealthy individuals, matters a lot in addressing the needs of the poor, Sheryl Sandberg, vice president of global online sales & operations at Google and a board member of Google.org, says in her Journal column.

Giving by individual Americans totals over four times that of foundation and corporate giving combined, she says, and fewer than 10,000 families account for over 20 percent of all donations.

The needs of the poor throughout the world also get the short end of giving, she says, with only 8 percent of all individual giving by Americans supporting international causes of any kind.

“The world’s poorest are virtually ignored by the philanthropic giving of citizens of the world’s wealthiest nation,” she says.

As Sandberg rightly points out, charitable giving that does not target the disadvantaged still supports important causes like education, health and the arts that “benefit everyone, rich and poor, though to substantially different degrees.”

Charitable giving and volunteering are central to the health of American society, and charitable organizations work hard to cultivate that impulse and engage Americans in causes they care about.

But charitable giving overall pales beside human and social problems that are overwhelming in their scope, complexity and impact.

In 2006, charitable giving overall in the U.S. totaled $260 billion, a mere fraction of the resources available to government.

And for four decades, average annual giving by American households has totaled a mere 2.2 percent of average household disposable income after taxes.

And while a new report by the Foundation Center says foundation giving last year exceeded $40 billion, a record, foundation giving overall accounted for only 11.5 percent of overall giving in 2005, according to Giving USA.

And foundations have put up a fierce fight against proposals for an increase in the share of their assets, currently 5 percent, they are required to pay out each year, a total that includes not just grants but overhead.

Clearly, individuals and foundations can give more overall and more to address the immediate and long-term needs of the poor and the underlying causes of poverty.

And whatever their focus, charities can do more to educate their donors and the public about the needs of the poor, and get involved in collaborative efforts to address those needs and their underlying causes.

Charities need to respect donors

The news about the charitable marketplace is mixed, underscoring the tough job charities face in securing the resources they need, as well as the possible payoff for that hard work.

New federal tax data, for example, show that while Americans with the highest incomes account for a bigger share of national income than they have held since before the Depression, and that total income in the U.S. grew almost 9 percent in 2005, average incomes for those in the bottom 90 percent fell slightly, The New York Times reports

So those with the biggest paychecks may be even more productive targets for fundraisers than in the past, while securing funds from everyone else may require even more work.

But while giving by living individuals totaled 76.5 percent of the more than $260 billion given to charity in 2005, average charitable giving per household in the U.S. for 40 years has totaled 2.2 percent of average household disposable income after taxes, according to Giving USA.

So whether targeting the upper or lower end of the income food chain, effective fundraising depends on engaging donors in a meaningful and personal way.

Underscoring the growing disenchantment with fundraising as usual, with charities treating donors like faceless change machines, is a report in The Wall Street Journal that says school officials and parents alike are fed up with traditional school fundraising strategies.

The Journal cites a survey the National Association of Elementary School Principals that says nearly two in three school principals would stop fundraising if they could because it is a distraction, puts too much pressure on kids, and burdens parents and teachers.

The Journal also says some schools and parents are bucking traditional fundraising methods like auctions, car washes and the sale of raffle tickets, and instead are donating money and gift cards directly to teachers, or giving cash to schools or even starting fundraising businesses.

To be more effective in their fundraising, charities must find ways to connect with donors and make a compelling case for support that is personal to the donors and engages them in causes they care about.

That of course is easier said than done, but charities cannot continue to approach fundraising as if they simply are entitled to support.

To raise the money they need, charities must approach donors the old-fashioned way, with passion, respect and connection.

Changemaker faces critical changeover

The decision by Tom Ross to step down this summer as executive director of the Z. Smith Reynolds Foundation in Winston-Salem, N.C., to become president of Davidson College is a big loss for philanthropy.

Ross, a superior court judge who six years ago succeeded Tom Lambeth on his retirement after serving as the foundation’s executive director for 22 years, simply deepened the organization’s legacy as an open-minded grantmaker and progressive change agent.

Philanthropy is diverse and includes approaches and strategies ranging from support for programs to address immediate needs to the funding of operations and the support of policy work to take on the underlying causes of deep-seated social and economic problems.

As North Carolina’s largest general-purpose funder with a statewide focus, the foundation for well over a generation has been diverse both in its programmatic and strategic focus.

Rooted in tobacco wealth, the foundation has funded organizations large and small that deal with a broad range of immediate needs, both local and statewide, while also taking on complex issues like poverty and racism.

As PJ reports, Ross has overseen big changes at Reynolds, including a reorganization of its grantmaking programs; development of online grantmaking that focuses on outcomes; and greater focus on helping nonprofits strengthen their internal operations.

Foundation executives occupy a privileged and pivotal role, looking for matches between nonprofits’ funding requests and the priorities of foundations’ founders and boards.

But their positions also can give foundation executives an opportunity to look beyond the foundation’s own grantmaking focus and play a leadership role in philanthropy and the charitable marketplace.

Thanks to its board, the Reynolds Foundation has been not only a committed grantmaker but also an important changemaker.

Under Ross, for example, the foundation has looked for ways to address urgent social problems like domestic violence.

As PJ reported at the time, the foundation two years ago launched a strategy for fighting domestic violence that included paying consultants to help a handful of nonprofits fighting domestic violence strengthen their fundraising, funding a study to find alternative funding streams for domestic-violence groups, and examining software for use in evaluating the cost of domestic violence to the state.

And Ross, like Lambeth before him, has served as a thoughtful, responsive and respected champion for the nonprofit world and voice for change and progress.

Ross helped spearhead development of what has become the North Carolina Network of Grantmakers, and helped persuade other foundations to join the state’s Hispanics in Philanthropy Initiative.

Philanthropy is what donors and the stewards of their funds choose to make it.

North Carolina is fortunate for the leadership that the Z. Smith Reynolds Foundation and leaders like Tom Lambeth and Tom Ross have provided.

Our state will be even more fortunate if the foundation’s next executive director continues that legacy of leadership.