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A free roundup of the most important news, opinion, tools, and resources of the week. Delivered every Saturday.

October 17, 2020

From: Stacy Palmer and Dan Parks

Subject: Keeping Up With Digital Demands Challenges Nonprofits

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Good morning. The pandemic may have forced more work online, but that doesn’t mean nonprofits are getting better at using technology for services, a new study finds, and they may be falling further behind. We examine the reasons more and more foundation money is landing in donor-advised funds, and distill the key findings of a new study on foundation pay and staff diversity. Charity Navigator takes a big step forward in measuring the results nonprofits achieve with donations, not just their efficiency in spending on salaries and other overhead. And Election Day is now just 17 days away, so we asked two experts to offer ideas on getting nonprofit staff members out to the polls.
Stacy Palmer and Dan Parks

Even in This Zoom Moment, Nonprofits Struggle With Technology

Photo of a Nurse-Family Partnership nurse visiting with a couple and their young daughter.

More nonprofit work is going digital in the pandemic, but few organizations are yet adept at providing services online only, a new study from Hopelab has found.

And just when many nonprofits want to step up their technology spending to do better, they can’t afford to because they are faced with stretched budgets and increased demand for services, Jim Rendon reports.

Only 26 percent of nonprofits have a senior-ranking official in charge of technology, and very few have access to employees who understand technology and design, says Margaret Laws, CEO of Hopelab.

The lack of digital savvy means “nonprofits are getting further and further away from the way their consumers or users live their everyday lives because they are not able to engage with them over the technology that they’re using.” And as a result, she says, it makes nonprofits “less convenient, less relevant.”

One challenge for many nonprofits is that few grant makers are willing to support their work to improve their technology. Three in four nonprofits in the Hopelab study said they had never received foundation support for their digital work. “You have this really perplexing situation where donors or philanthropists who would never run their businesses without technology who won't fund the technology aspect of a nonprofit organization because it doesn’t feel like it’s a direct service,” says Laws.

Still, some groups are overcoming the challenge. Among them Nurse-Family Partnership, a nonprofit that arranges home visits between nurses and young first-time mothers. It worked with Hopelab to develop an app for the nurses and their clients. The app has been crucial during the Covid crisis because it allows the nurses and mothers to build bonds without the danger of in-person contact. What’s more, some mothers have been more forthcoming about their challenges through the app then during in-person visits — and that’s one reason the group will continue using technology long after the Covid emergency and the need for social distancing are over.

Foundations Are Moving More Money Into DAFs

Foundations are shifting more dollars into donor-advised funds, a new Chronicle analysis finds. The tactic is legal but questionable because it is a way to avoid public disclosure rules and work around foundation payout rules.

At least 375 foundations sent more than $740 million to donor-advised funds in 2018, the latest year for which tax returns are available, Marc Gunther found. That’s more in a single year than in the three years we last studied (2014 to 2016).

Roger Colinvaux, a law professor at Catholic University and an expert on donor-advised funds, who was formerly counsel to Congress’s Joint Committee on Taxation, says: “If all the foundation is doing is shifting money from one investment fund to another investment fund, it’s violating the spirit of the rules.”

The growing use of the tactic has prompted calls for Congress to take action to prevent the transfers. The billionaire philanthropist John Arnold and Boston College law professor Ray Madoff are shaping a proposal for lawmakers that would make the transfers illegal. And the Minnesota Council on Foundations has proposed that grant makers be required to report to state attorneys general and the public on all grants from DAF accounts to which they have transferred funds.

Philanthropy experts are opposed to the calls for new rules, saying there are many good reasons for foundations to transfer money to donor-advised funds, including the protection of donor privacy.

“Donor privacy is essential to a vibrant civil society,” says Joanne Florino, a vice president of the Philanthropy Roundtable. “It protects donors who give to controversial causes, donors who give anonymously from a sense of humility or deeply held religious beliefs, and donors who wish to minimize off-mission solicitations.”

A surge in donor-advised fund giving through community foundations. Gifts from donor-advised funds housed at some of the largest community foundations in the nation soared 42 percent in March through August compared with the same period last year, according to new data.

Foundation Leadership Ranks Show No Movement on Diversity

Grant makers are pouring money into racial-equity efforts in record numbers but they are still struggling to diversify their own work forces, a new Council on Foundations report finds.

People of color account for only 27.3 percent of all full-time staff positions, and just 1 in 10 foundation leaders are people of color.

The study also looked at how much foundations pay their staff. Ninety percent of the grant makers reported giving raises in 2019; the median salary increase was 3.5 percent. About 70 percent of foundations said they expected to, or already had, given raises in 2020.

A gender gap persists in the pay of female foundation leaders, the study found. The  median annual salary for women in leadership roles was $181,000, compared with $216,000 for their male counterparts.

What Works to Get the Attention of Big Donors Now

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As we enter the busy year-end fundraising season, most fundraisers still can’t meet in person with their donors. But as the pandemic enters its eight month, many groups are finding better ways to stay in touch, Lisa Schohl reports.

For instance, when Father Joe’s Villages, a homeless services charity in San Diego, took its gala online because of the coronavirus, the fundraisers did “door drops” for some key donors, says Wendy Endsley, associate director of development.

Endsley’s team left bottles of wine that the group would have served at the in-person gala on donors’ doorsteps with a note reminding them to participate in the online auction.

The nonprofit also began holding Zoom “investor calls” as a way to give contributors a “taste of being on site,” Endsley says.

The first call, in which the CEO and medical director talked about the group’s work responding to Covid, prompted a $10,000 gift from a new supporter. The calls were so well received that Father Joe’s expanded the format to feature program leaders at different locations, showcasing various aspects of its work.

Sunil Oommen, a fundraising consultant, says it’s important in such calls to stress why you need support today — and share data that proves it. For example, an advocacy organization could explain that it needs to pay staff members to help urge members of Congress to pass an emergency bill.

Hear directly from a big donor: Melanie Lundquist, a Giving Pledge donor, joined the Chronicle’s Maria Di Mento for a free online discussion you can replay now. Asked what nonprofits can do to persuade her to give, she says: Tell good stories about their successes and the people who benefit from their work. “It’s that kind of personal connection that moves me.”

A Charity Watchdog Works to Put the Focus on Results

The watchdog group Charity Navigator has long ranked nonprofits largely on how much they spend on programs versus salaries and other management overhead.

That irks many nonprofit leaders, who say that measure shows little understanding of what it takes to get results. This week Charity Navigator announced it is taking a major step to help donors compare how well groups use every dollar to achieve their missions. With $375,000 from the Bill & Melinda Gates Foundation, it has acquired ImpactMatters, a site created by the Northwestern University behavioral economist Dean Karlan and led by one of his former students, Elijah Goldberg.

The acquisition will allow Charity Navigator to fundamentally alter the nature of its ratings.

A new charity scoring system created by the combined work of Charity Navigator and ImpactMatters gives 60 percent weighting to a charity’s impact, while finance and accountability will get a 40 percent weighting. Financial measures may be further de-emphasized in the future, but Charity Navigator says they will always be a part of charity ratings because donors want to know about overhead spending.

“People are demanding financial accountability,” says Michael Thatcher, chief executive of Charity Navigator. “They want to see those numbers.”

Dig deeper: Read a Chronicle essay by Dean Karlan and another scholar, Mary Kay Gugerty, about the ways nonprofits can help donors better understand their impact.

What It Takes for Foundations to Spark a National Recovery

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By embracing more risk, stepping up their donations, and changing how they interact with nonprofits, family funds have the potential to be key to the recovery and reset ahead, write Michael Moody of Grand Valley State University and Danielle LaJoie of the New Mexico Association of Grantmakers.

Family funds often have little or no staff and fewer layers of bureaucracy, so they can respond quickly to pressing needs.

For example, the donors behind many women’s funds and giving circles, such as the Women’s Foundation California or members of the Women’s Funding Network, quickly recognized that stay-at-home orders during the pandemic could have a hidden consequence: an uptick in domestic violence. So they mobilized support to that cause.

While family funds often struggle with governance and decision making, the time for change is now, say Moody and LaJoie.

“Even if it feels uncomfortable, family donors need to find ways to share power and include the voices of grantees and others,” they write. “To accommodate real-time responses to near-daily crises, ad hoc family meetings and regular check-ins should become standard. The lockdown is a good time to start family conversations about new approaches.”

How to give grantees more power: In another essay we published this week, Renee Karibi-Whyte, a consultant who works with Rockefeller Philanthropy Advisors, writes that the keys to change require leaders to step outside their bubbles of “people like us,” reconsider outdated and harmful organizational practices, and stick with plans for change even when times are tough.

As Election Day Nears, Will More Nonprofit Staff Members Vote?

Many nonprofit workers are among the millions of registered voters who don’t show up at the polls. But it’s time to change that, write Brian Miller of Nonprofit Vote and Jeffrey Moore of Independent Sector.

Giving nonprofit staff members time off to go vote, or to volunteer at a polling location, helps them feel more connected to their own communities and inspires those closest to them to also get involved,” they write.

What’s more, they say nonprofits can help their staff members and other voters better understand the connection between voting and the services that a nonprofit provides. And they can demystify the voting process, which is especially important with the expansion of mail-in voting in the time of Covid.

Notable Gifts and Grants: Racial Equity and 2 Megagifts

Racial equity: The W.K. Kellogg Foundation will award $90 million through a new competitive grant program for groups working to achieve racial equity, writes Alex Daniels

A $300 million gift to advance science: Fred and June Kummer gave $300 million to establish this foundation that will support new programs at the Missouri University of Science and Technology. Fred Krummer founded a successful construction company. See more about that donation and others in our weekly roundup of notable gifts.

A $500 million grant to benefit Maine’s residents: The Harold Alfond Foundation will give $500 million to nonprofit groups in Maine to develop the state’s work force and economy and improve the quality of health care for Maine residents. See more about that grant and other new awards in our weekly roundup.

People on the Move

  • Nwamaka Agbo, a consultant in Oakland, Calif., will be the first CEO of the Kataly Foundation. Regan Pritzker, a member of the Pritzker family that owns the Hyatt hotel chain and Tao Capital Partners, and Chris Olin, her husband and a partner at Tao, created this family foundation in 2018 with $445 million in assets.
  • Arturo Aguilar, executive director of the Seattle International Foundation, will now design and lead the Rockefeller Brothers Fund’s new grant-making program for Central America. The funding for this expanded program came through an estate gift from David Rockefeller, who died in 2017 at age 101.

See more in our Transitions column

How to Boost Your Planned-Giving Program

Join Our Webinar — Jump-start your planned-giving program by learning how to create appeals and marketing materials that resonate — even during these challenging times. You’ll learn from a planned-giving director at a nonprofit, a veteran consultant, and a planned-giving director at a financial-services firm. They’ll share:

  • Strategies for strengthening legacy giving (even if you’re just getting started)
  • Tips for developing a planned-giving strategy
  • Real-world examples of how to frame conversations and messages, and
  • Detailed marketing advice and examples

Plus, you’ll get tips on how to recognize these donors and keep them engaged in your work. Register now to get the early-bird rate for this session, which airs Thursday, October 22, at 2 p.m. Eastern.

New Grant Opportunities

Your Chronicle subscription includes free access to GrantStation's database of grant opportunities. Among the latest listings:

  • Human progress and an independent media. The Glaser Progress Foundation is accepting application letters in the following program areas: improving our understanding and measurement of human progress; and strengthening democracy by giving voice to the world's silent majority. Application letters may be submitted at any time.
  • Environment. The Temper of the Times Foundation promotes the use of standard marketing concepts to increase awareness about wildland ecosystem conservation and restoration efforts. It is providing funds to underwrite advertising designed to promote the conservation and restoration of native wildlife, plants, and ecosystems. Grants of $5,000 to $15,000 may be used to fund the production of print, radio, or TV ads; to pay for advertising space or airtime; or to produce or distribute pamphlets, books, videos, or press packets. The application deadline is December 15.