Recruiting the next great generation

By Todd Cohen

Ripped apart by a culture of greed and blame, the U.S. has become its own worst enemy, and we need a commitment to public service to help make ourselves whole again.

After its struggle and sacrifice during the Great Depression, “the greatest generation” defeated the Axis powers in World War II and powered the post-war economic boom.

But despite our economic and military might, we have lost our way, trapped in a self-fulfilling cycle of fear, hate, intolerance, finger-pointing, self-absorption and a righteous and unearned sense of entitlement.

Despite the mess we are in, Tom Brokaw, the former NBC News anchor and author of “The Greatest Generation,” has hope that the U.S. can reclaim its greatness.

We have failed as a people since 9/11 and during the current economic crisis to make anywhere near the kinds of sacrifices the men and women in our military have made in fighting a series of wars in the Gulf, Brokaw told nearly 650 people Nov. 18 at the Shelton National Leadership Forum at N.C. State University.

“It’s time for the rest of us to re-enlist as citizens,” Brokaw said at the Forum, created by Gen. H. Hugh Shelton, a North Carolina native and N.C. State graduate who served as chairman of the Joint Chiefs of Staff.

Brokaw proposed that six public-service academies be created, possibly at land-grant universities such as Cornell and Colorado State.

The academies, the civil equivalent of our military academies, would offer three-year fellowships supported through public-private partnerships.

Enrollment in the fellowships, Brokaw said, might be modeled on service in the Israeli Defense Forces, where national military service is mandatory for all citizens over age 18.

So fellows would serve after completing high school and before enrolling in college, and fellowships would include or be followed by service abroad.

Graduates of the academies, like people mustering out of the Israeli Defense Forces, Brokaw said, would be more mature when they enrolled in college, having learned important life lessons and critical skills such as managing risk and serving on a team.

Graduates of the academies also would function as a kind of “diplomatic special forces,” he said, sharing the best values of our society and culture with people in other countries, while learning about their culture and sharing what they learn when they return home.

Brokaw said America is under siege, both at home from the divisiveness in our society and politics, and abroad from fiercely competitive economic powers like China.

That competition, he said, is the economic and cultural equivalent of war.

And a key way to wage that war is through public service and the kind of sacrifice and commitment “the greatest generation” made to make America whole again after the devastation of the Great Depression and World War II.

So ultimately, Brokaw said, we need leadership.

Brokaw characterized our need for leadership by quoting the demand, if not the plea, from one of his young granddaughters when she was alone with her sister in a cabin during a camping trip while he and his wife were outside the cabin sleeping under the stars: “We need an adult – now.”

Philanthropy without borders emerging

By Todd Cohen

The players are shifting and the lines are blurring in the “social economy,” creating big challenges and opportunities for people who care about social change.

At stake is the way private assets will be used for public good, whether through charitable giving, “impact investing” in the capital markets, or political advocacy and policy work.

Social investors increasingly are focusing assets on what they believe will be the most effective strategy for helping people and places in need, and are looking for results and not worrying about which sector an effective social-change organization happens to occupy.

The challenge for charities is to make sure that they not only are effective but also can help make investors’ assets more productive by teaming with other organizations, regardless of sector.

Those critical issues were addressed recently at a Children’s Investment Summit in Charlotte, N.C., by Lucy Bernholz, managing director of Arabella Philanthropic Investment Advisors.

“The way we make change happen has expanded, diversified,” Bernholz told about 50 funders and children’s advocates at the event, which was organized by the Council for Children’s Rights.

Social investing

Building on the traditional investment of individual donors, charitable foundations and corporate giving, and the work of nonprofits, Bernholz said, the social economy in the past 18 months has experienced a “sea change.”

What has emerged is a marketplace of rapidly-growing choices and opportunities for individuals and companies “to engage directly in how they can use their resources to advance social good,” she said.

Investors in the capital markets, for example, increasingly are screening their portfolios to “align with their values,” she said, either investing in companies with social values they share or shunning those with values they oppose.

In a global market worth $7 trillion, that rapidly-growing breed of social investor can be a powerful force for social and global change.

And a growing number of states have passed laws that allow the incorporation of “benefit” corporations that have the twin goals of advancing a social cause while building shareholder value.

That approach, designed to make it easier for the companies to raise capital while eliminating the risk to their directors from lawsuits claiming the companies’ pursuit of social goals weakens shareholder value, likely will produce a “train-wreck” confrontation with traditional nonprofits, Bernholz said.

Convergence

The battle will be over, on the one hand, preserving the traditional definition and form of nonprofits, as well as the public policy that encourages charitable giving and, on the other hand, whether effective for-profit companies that have a social mission should have to compete against ineffective organizations that get a tax-exemption.

The convergence of sectors in the social economy is not a big issue for young entrepreneurs with a social mission, Bernholz said, because as long as their investment makes a difference, that increasingly effective and influential group of social investors do not care whether they invest in for-profit organizations or nonprofits.

Data and metrics

What social investors increasingly want, Bernholz said, are data and metrics that show the impact of a social program.

Data not only help a nonprofit or social venture tell its story better, but are critical to securing social investment, she said.

“You can’t grow the marketplace without measuring,” she said.

And today’s investors expect data to be available, she said, so nonprofits and social enterprises need to share information and be transparent about who they are, where they get their money, what they do, and their impact.

Philanthropy’s limits

Undermining the role of traditional philanthropy in the new social economy is the fact that philanthropy has “vastly oversold itself,” Bernholz said.

When private philanthropy agrees to try to help offset cuts in public spending for programs like those that have been eliminated in public schools, for example, it creates a “substitution effect,” she said, with taxpayers and government then taking it for granted that tax dollars no longer are needed for those programs.

And private philanthropy cannot begin to replace government funding to address basic public needs such as education, transportation and law enforcement.

“Philanthropy can’t do it all,” Bernholz said.

Leveraging

What philanthropy can do is try to leverage its assets, working in partnership not only with nonprofits and other charitable funders but also with for-profit companies and with government, and getting involved in policy work and advocacy.

Philanthropy, Bernholz said, “only makes a difference it if influences other resources.”

Another big trend in the social economy is the growth of private investment in political advocacy, a trend that got a big boost from the U.S. Supreme Court in 2010 in the landmark Citizens United decision that expanded the role corporations and unions can play in funding political broadcasts in candidate elections.

In the face of all these converging forces in the social economy, nonprofits need to be much more focused, strategic, collaborative, efficient and effective.

Showing impact

Regardless of its size and shape, and whether it lives in the nonprofit, for-profit or political world, a social enterprise that wants to attract social investment needs to be able to make a difference, show its impact and tell its story.

And despite seemingly overwhelming social and global problems, social investors still can make a big difference, regardless of the vehicle in which they choose to invest.

The key for them will be to picking social-change organizations that show they can make an impact on a particular cause by making productive use of the investment they get, and using that investment to build partnerships and secure additional resources to address that cause.

A manifesto for smarter fundraising

By Todd Cohen

Nonprofits are consumed, often unproductively, with fundraising.

They frequently invest precious dollars to hire the wrong people to chase the wrong money from the wrong donors using the wrong sales strategies and pitches.

It is no wonder that over the past 40 years, charitable giving in the U.S. has barely budged from its 2 percent share of average household disposable income after taxes.

Now, based on ideas from several gatherings of nonprofit leaders, researchers, consultants and vendors, two philanthropy scholars at Indiana University have produced a report that calls for a much-needed overhaul of the fundraising business.

In the report, Growing Philanthropy in the United States, Adrian Sargeant and Jen Shang call for sweeping changes to build fundraising through creating more meaningful and productive donor relationships, focusing on audiences and fundraising strategies that can grow, improving fundraising training and development, and building public trust in nonprofits.

“Forty years of increasingly sophisticated fundraising practice, the development of planned giving vehicles, the appearance of the Internet, and the rise of new digital channels have done nothing to move the needle on giving,” they write.

The report, released by Blackbaud and the Hartsook Institutes for Fundraising, offers a slew of recommendations, all aiming to improve fundraising so it can grow giving.

Donor relationships

High on the list of the report’s criticism of fundraising are ways fundraisers operate and deal with donors.

Fundraisers treat donors as “piggy banks” and focus on performance measures such as response rates, immediate return on investment, and total amounts campaigns raise, an approach that is obsessed with metrics and is “crippling” the long-term performance of fundraising programs, the report says.

In their annual funds, for example, charities lose well over half their supporters between the first and second donation, and 30 percent a year from then on.

The sector “remains too focused on donor acquisition, content simply to refill an increasingly leaky bucket and ignoring opportunities to build meaningful relationships with supporters over time,” the report says.

Instead, it says, nonprofits should focus on increasing donor loyalty and retention by emphasizing the values of donors and the impact they can have, and giving them greater control over the relationship with the charity.

Charities also need to recognize the value of their fundraising programs.

To address turnover rates that typically can total 30 percent a year among staff, for example, nonprofit CEOs and boards need to show their fundraisers the respect they deserve.

Charities also must reorganize their fundraising operations; integrate separate programs for annual, major, campaign and planned giving; build collaboration among fundraising staff; promote shared back-office facilities; and support a longer-term approach rooted in stewardship and not driven by short-term and “siloed” metrics that “will only be counterproductive.”

Public trust

Growing philanthropy requires developing public confidence in charities, the report says.

No nonprofit that reports public donations, for example, should claim to have zero costs of fundraising, the report says, and leaders inside and outside the nonprofit sector that promote “inappropriately low ratios and pretend that this is somehow good business” should be challenged the report says.

“Fundraising should be regarded as an investment” that must be properly reported, it says.

It also calls for nonprofits in different fields and subsectors to create their own range of performance metrics, and for trade groups to map out and enforce best-practices codes for each form of fundraising and bar from membership any professionals who fail to meet those standards.

New giving

Charities need to encourage monthly giving, do a better job of engaging young people, promote best practices in social media, and encourage asset-based giving, the report says.

Cash, for example, represents only 7 percent of the average American’s wealth, according to estimates, so assets represent 93 percent of a person’s giving potential and are “largely untapped by fundraisers” who mainly continue to ask for cash.

Charities also need to do a better job asking for bequests, says the report, which also says the passing of the Baby Boomers will result in a “massive drop” in annual giving.

Over 80 percent of Americans will support nonprofits during their lifetimes, yet only about 8 percent will do so on their death, says the report, which calls for nonprofits to encourage every category of supporter to consider making a bequest or gift in their will.

“Responsibility for securing outright ‘gifts in wills’ must be wrested from planned-giving departments and promoted as a core form of giving in all categories of supporter,” the report says.

It also calls for encouraging wealthy people to “think through for themselves what might constitute an appropriate portion of their wealth to give away,” rather than “scolding” them.

Training and development

The quality of fundraising training and development also needs to improve, the report says.

Foundations, for example, should invest in research that aims to help grow giving and benefit the sector as a whole, says the report, which also calls for creating the field of “donor behavior,” growing giving by “enhancing the quality of the donor experience,” and establishing a research institute to focus on fundraising and serve as a research-and-development department for the sector.

Existing systems of professional development and certification for fundraisers need to make “knowledge of donor behavior” central to a career in fundraising, while undergraduate programs in fundraising should be developed, and all masters’ programs in nonprofit management should include a required module on fundraising.

The report also calls on colleges and other institutions that offer fundraising certificates to “label what amounts only to a certificate of attendance as exactly that.”

Teaching and learning resources also need to be developed and made available to help boards overcome their “endemic lack of understanding of how to fundraise,” a gap the report calls “the critical barrier to developing philanthropy in the U.S.”

What next?

Sargeant and Shang say they will set priorities among their recommendations and assemble working groups to develop action plans to put them into effect.

But nonprofits and foundations can begin immediately to better understand the fundamental role that fundraising plays in advancing their mission, the fundamental flaws in the way charities raise money, and the fundamental need among donors to have deeper, more meaningful and more engaged roles with causes they care about.

In short, nonprofits and foundations need to reinvent the way they work with donors, and invest greater attention and resources to growing philanthropy so they can more effectively serve people and places in need.

Filling charities’ leadership gap

By Todd Cohen

The charitable marketplace is thin on leadership, and needs a quick infusion.

Smart, effective and passionate managers are helping many nonprofits and philanthropies stay afloat in an economy and society hurtling toward chaos.

But the spark that distinguishes leaders from managers is in short supply.

Leadership is a widely touted concept, and everyone seems to have a different take on what it means and who has it.

Amazon, for example, lists over 72,500 “leadership books,” many of them written by retired sports coaches, retired military leaders, and self-anointed leadership gurus.

But the proof of leadership lies not in theory or feel-good prescriptions but in the results that leaders produce.

And a key to understanding why leaders succeed is to understand how they think and work.

Two articles The New York Times published October 29 offer perceptive insights into leadership by looking at leaders who achieved extraordinary business success.

In “The Genius of Jobs,” Walter Isaacson says that what distinguished the late Steve Jobs was his intuition, “based not on conventional learning but on experiential wisdom.”

Isaacson, author of a new biography of Jobs, says the maestro of Apple combined “an appreciation of the humanities with an understanding of science,” was “emotionally attuned” to his staff and to consumers, could “intuit the relationships between different things,” and was able to execute on his vision.

In the second article, “What’s Luck Got to Do With It?”, Jim Collins and Morten T. Hansen say highly successful business leaders are able to generate a high “return on luck,” good or bad.

Based on an examination of 230 “significant luck events” their subjects experienced, Collins and Hansen found that the big winners were not generally “luckier” than other leaders they studied.

While good and bad luck happens to everyone, they say, those like Microsoft’s Bill Gates who achieve extraordinary success “recognize luck and seize it.”

And while getting a high return on good luck is “essential,” getting a high return on bad luck can be a “truly defining moment” if a leader takes hold of it and transforms it into an opportunity, Collins and Hansen say.

So at a time of economic, social and global crises that have unleashed massive instability throughout the charitable marketplace, we need leaders with vision, intuition and the ability to identify, grab and run with opportunity.

Charities are living on the edge, their staffs stressed, their capacity strained, and their boards on auto pilot.

Donors are cautious and looking for involvement and impact, foundations are looking for evidence-based programs with a lot of impact, and corporate givers are looking to invest in causes that will make a big impact on social and global problems that also represent big obstacles to their own bottom line.

To thrive, nonprofits need more than just good managers; they need leaders with vision and intuition who can recognize big problems, both in their organizations and in their communities; identify and connect seemingly unrelated resources and strategies; and inspire people and partners who can work together and invest in addressing those problems.

Whether they are paid employees, volunteers or board members, charities need leaders with the vision to transform random luck into the opportunity to make a big difference in helping people and places in need.