Michael R. Howland, CAE, is the president and CEO of the Southeastern Council of Foundations. Michael R. Howland, CAE, is the president and CEO of the Southeastern Council of Foundations. When I led the U.S. Small Business Administration (SBA) in San Francisco, I was struck by the enormity of people who thought they could start and run a restaurant profitably. Mind you, many of these individuals had never even worked in a restaurant, engaged in wholesale food purchasing or developed menus beyond their family units. A business plan? No chance. But most had a concept, a name picked out and a fervent belief they would be successful. Not surprisingly, restaurants represented the greatest chunk of failures on SBA loans, and those were establishments that had business plans and capital to fuel their launch.
There is a parallel in our world, of course. There are scores of people out there that think that they’re capable of starting and managing a nonprofit. It can’t be that difficult, right?
As I shoved my Chronicle of Philanthropy into my laptop bag in anticipation of landing in Northwest Arkansas recently, my thoughts were interrupted by the individual in the adjacent seat, “Excuse me. Do you work with charities?”
“Yes,” I answered. “Why do you ask?”
“I’m thinking about starting a non-profit to help kids with literacy,” he responded. “I’m going to call it Each One, Reach One, Teach One.”
He looked to me for approval, but received instead a rapid-fire string of questions: “Have you been involved as a board member of any non-profit organizations? Have you looked around your community to see if any good literacy programs exist to which you might lend a hand?” Etc.
A bit startled, he answered no to all of them, then retreated with a, “Like I said, I’m just thinking about it right now.”
I encouraged him to check with his United Way to learn about community organizations with a focus on literacy, and he said he would do so.
We’ve all had those conversations, with our friends as well as perfect strangers. Somehow, there’s this passionate, altruistic desire to give back coupled with the notion that putting together and running a non-profit can’t be that difficult.
The "putting together" side of that equation is fairly accurate. The fact that we now have 1.1 million charities in this country is testament to that. Comply with the laws of your state for incorporation, determine your charitable purpose, pull together a few friends to serve on your board, send off your eligibility request for tax-exempt status to the Internal Revenue Service and, voila, you’re in the charity business.
The precipitous decline in our U.S. economy in 2008 and the strains it placed on charities catalyzed a call from the philanthropic community for collaboration and consolidation in the non-profit sector. Perhaps weeding out the charitable marketplace isn’t a bad thing, we proffered. Likewise, I’ve heard sentiment expressed recently that the IRS revocation of 501(c)(3) status of charities failing to file their 990 PF forms is not such a bad thing, either, under the rubric that charities that can’t handle such basic regulatory checks shouldn’t be permitted to exist in perpetuity.
I can’t refrain from the obvious question, however: what if we required more on the front end to secure 501(c)(3) status? Perhaps requiring incorporators to demonstrate how their proposed charity will distinguish itself in the marketplace by meeting a need (in the community or otherwise) that is not served already by another charity. How about charging a registration fee sufficient enough to make people think twice about creating a new entity, and simultaneously create more resources for the IRS to undertake a broader review of the non-profit sector? If nothing else, that might encourage more due diligence and encourage people driven more by altruism than ego to give their time and talents to an existing nonprofit.
In the meantime, we can continue to have those one-on-one conversations.
What do you think?
I’ve just returned from the SECF Family Foundations Forum in Charleston, South Carolina. It was an incredibly rich and meaningful time together, complete with ample opportunities for foundation networking and much sharing of great grantmaking resources. Once again, I was impressed with the level of engagement among the 70 trustees and staff who attended. Their commitment to their foundations and communities, and their sincere desire to continually learn how to do their great work even better, is truly inspirational.
One saying popped up a few times during this meeting, “If you’ve seen one family foundation, you’ve seen one family foundation.” That’s very true. Family foundations are in essence extensions of the families that steward them, and are every bit as diverse. It spawned some great discussions and exchanges of ideas.
One topic that generated discussion was that of politics and philanthropy and, specifically, the relationship between our field and government in light of the new administration. To me, it underscored the point that the jury is still out on whether a deeper level of engagement from government will be a plus or minus for our field.
Some of the discussion centered around last week’s article in the Wall Street Journal about the very palpable mutual admiration between foundations and the current administration at the Council on Foundations meeting. But I was at that meeting, as well as other philanthropy conferences, and I've also heard a different view. Many were still feeling the sting of the proposed cap on charitable deductions in 2009, which was beaten back with bipartisan opposition, but has reappeared in the President’s 2011 budget.
Then there’s also the question of the Social Innovation Fund. Many applaud it, and it will no doubt have a significant impact on some terrific organizations. There’s another perspective, however, that the White House, in creating this fund and the bureaucracy to support it, essentially is saying they think the government can affect change and invest this money better than foundations.
It’s still too early to tell. I believe that the real litmus test for the Obama Administration and its embrace of philanthropy and supportive philanthropy policy may not come until we see what happens when and if tax reform arrives on the front burner.
But there’s one key observation that comes from being among our family foundation members this week. Legislation and policy have alternatively targeted or all but ignored philanthropy for generations. And for generations, families with charitable values have found a way to keep the foundation fires burning.
We've all just returned from Foundations on the Hill, and today I offer my blog space to Helen Ishii, our director of member and government affairs, who led SECF's charge of 50 people up the steps of Capitol Hill and lived to tell about it. The results were the best we've seen from any Foundations on the Hill event to date. My hat's off to Helen for pulling us all together. Here's her reflection from the experience:
I'm sitting across from a couple of very bright Congressional staffers, making idle chit chat and finding connections with less than six degrees of separation, as we await Rep. Boozman (D-AR-3rd) to return from a vote to meet with us. I appreciate that the Congressman finds our visit important enough to return to the office, especially as it's now 5:00 p.m. I also appreciate that in every office we've visited today, someone in our group has found a personal connection to at least one staffer and also often to the Member of Congress. These personal connections have proven important over the years as they are often what makes a staffer or Member comfortable calling on us as a resource.
This is my 6th trek to DC for Foundations on the Hill. This physically exhausting trip has become a valued annual event for our members, 50 of whom made it this year. These hearty souls put many miles on their soles as they walk and walk and walk the halls on the Hill. This year they have visited 94 Members of Congress from the 11 states in the Southeastern Council of Foundations' (SECF) region. Every year we return to educate the ever revolving supply of extremely young, extremely bright and extremely inexperienced staffers about the work of foundations, as well as to inform Members of Congress on the issues impacting our sector.
This year I joined our teams from Arkansas and South Carolina as they made their visits. Senator Blanche Lincoln (D-AR) immediately "got" the importance of basing the TANF (Temporary Aid to Needy Families) funding formula upon need and the benefit that would accrue to all Southern states. She also remarked about how helpful it was to have the same message delivered to her Southern colleagues by other SECF members.
Everyone saw how a cap on charitable deductions could be harmful to the sector. As to be expected, the chair of the House Budget Committee, Rep. John Spratt (D-SC-5th) asked about the "scoring" of H.R. 4090, which will simplify the private foundation excise tax to a flat rate. We were able to answer his question, thanks to the briefings we'd received from COF the day before. Soon, blessedly soon, I'll be walking to the METRO to catch a flight home, where I'll finally be able to soak my aching feet and begin my thank you notes to continue the relationships begun today.
- Helen Ishii, SECF Director of Member and Government Relations
An article in the January 10 Arkansas Democrat-Gazette, "Transition from Sparks Hospital to Charitable Entity a Long Process," is noteworthy in two respects: it is a great example of a local reporter, Laurie Whalen, reaching out for a larger perspective on philanthropy, setting up a foundation and foundation regulations; and it underscores the importance of having foundation officials who are accessible to the media, willing and capable of explaining philanthropy policy in terms that the average reader can digest and comprehend.
In this instance, Heather Larkin, president and CEO of the Arkansas Community Foundation in Little Rock, offered a very helpful explanation of health conversion foundations, while articulating that transparency and accountability must be hallmarks of all foundations. Kudos to Whalen and Larkin for helping Arkansas citizens to understand the challenges and nuances involved in the creation of the Fort Smith Regional Healthcare Foundation out of the sale of the non-profit Sparks Regional Medical Center to a for-profit health care provider and simultaneously increasing public awareness of the extraordinary benefits that foundations offer their communities.
Three cheers for John Stephenson, Executive Director of the J. Bulow Campbell Foundation in Atlanta, for testifying this morning at the House Ways and Means Oversight and Income Security and Family Support Subcommittees Joint Hearing on "Food Banks and Front-Line Charities: Unprecedented Demand and Unmet Need." (Click here to view his written testimony.) If you've not done it, I assure you that the first-time experience of testifying before Congress is quite intimidating. Yet Mr. Stephenson appeared confident in every respect as he offered clear, concise and compelling testimony in articulating the challenges facing the Atlanta Food Bank and other charities struggling to meet basic human service needs in the wake of the "Perfect Storm" wrought by the recession and the spike in unemployment. He explained how foundations like his have expanded the scope of their giving beyond traditional bricks and mortar projects to special grants to the food bank and other front-line charities.
Mr. Stephenson also outlined three ways Congress can facilitate greater philanthropic investment in meeting these overwhelming needs: (1) Continue to defeat any moves to cap charitable deductions; (2) Enact the single, revenue-neutral excise tax proffered in H.R. 4090/S. 676; and, (3) Extend the rollover of IRAs to charities without penalty, and expand the provision to include donor-advised funds at community foundations per H.R. 1250 and S. 864. Mr. Stephenson was followed in his testimony by Brian Gallagher, CEO of United Way Worldwide, who echoed his support of those three measures.
We thank Mr. Stephenson for his courage, and for the time and energy he invested in preparing and delivering his testimony and travelling to Washington. Let's hope Congress listens and acts!
By the way, 2009 was the first year that Mr. Stephenson, a former Southeastern Council of Foundations Board Chair, participated in Foundations On The Hill. Now this! Clearly, he recognized that the stakes for philanthropy on the government affairs front are at an unprecedented high. What about you? Please consider writing your Representative and Senators with your own stories about your foundation and community, encouraging them to embrace these critical proposals. And plan on joining Mr. Stephenson and your foundation colleagues who will convene on Capitol Hill for the next Foundations On The Hill March 16-17, 2010.
Mr. Stephenson also outlined three ways Congress can facilitate greater philanthropic investment in meeting these overwhelming needs: (1) Continue to defeat any moves to cap charitable deductions; (2) Enact the single, revenue-neutral excise tax proffered in H.R. 4090/S. 676; and, (3) Extend the rollover of IRAs to charities without penalty, and expand the provision to include donor-advised funds at community foundations per H.R. 1250 and S. 864. Mr. Stephenson was followed in his testimony by Brian Gallagher, CEO of United Way Worldwide, who echoed his support of those three measures.
We thank Mr. Stephenson for his courage, and for the time and energy he invested in preparing and delivering his testimony and travelling to Washington. Let's hope Congress listens and acts!
By the way, 2009 was the first year that Mr. Stephenson, a former Southeastern Council of Foundations Board Chair, participated in Foundations On The Hill. Now this! Clearly, he recognized that the stakes for philanthropy on the government affairs front are at an unprecedented high. What about you? Please consider writing your Representative and Senators with your own stories about your foundation and community, encouraging them to embrace these critical proposals. And plan on joining Mr. Stephenson and your foundation colleagues who will convene on Capitol Hill for the next Foundations On The Hill March 16-17, 2010.
When foundations descended on Capitol Hill March 25th for the annual Foundations On The Hill visits, the major issue preoccupying foundation executives and trustees was the Obama Administration proposal to limit the deduction for charitable contributions by wealthy individuals. Many were surprised that the first major initiative emerging from an Obama presidency presumed (because of the President's previous experience with foundations and non-profits) to be pro-philanthropy was a seeming strike against charity and apple pie. How could we contemplate any move that might deter contributions to food banks and homeless shelters with unemployment and foreclosure rates escalating rapidly?
The Senators and Representatives with whom the Southeastern Council of Foundations delegation met were quick to reassure us that they felt the proposal defied logic as well. Their reaction at the time was bipartisan and virtually unanimous against the proposal.
In the ensuing months, the non-profit sector--or at least much of it--has championed the notion that capping the deduction for charitable donations is a recipe for poor public policy. Myriad umbrella groups, including the Council of Foundations, American Society of Association Executives and Association of Fundraising Professionals, petitioned Senate Finance Committee Chairman Max Baucus with a cogent, collaborative letter urging preservation of the deduction. It has been terrific to see non-profit and philanthropic infrastructure groups unite and, for the most part, speak with one strong voice.
However, there is a danger of the voice of philanthropy being muffled in the larger debate over health care reform to which the limit on deductions has been--at least so far--inextricably linked. And, let's face it, health care reform is sufficiently important that it should dominate the airwaves. But, if the charitable deduction limitation becomes law as a tradeoff for changes in our national health care system, let it not transpire because philanthropy neglected to weigh in forcefully one more time before the vote.
The importance of non-profit infrastructure groups weighing in on this issue cannot be overstated. However, there's nothing more compelling than individual grantmaking foundations and charities articulating poignantly how such a limit on deductions may inhibit the capacity to serve people in the policymaker's own backyard.
Paint the picture, and send it in today!
The Senators and Representatives with whom the Southeastern Council of Foundations delegation met were quick to reassure us that they felt the proposal defied logic as well. Their reaction at the time was bipartisan and virtually unanimous against the proposal.
In the ensuing months, the non-profit sector--or at least much of it--has championed the notion that capping the deduction for charitable donations is a recipe for poor public policy. Myriad umbrella groups, including the Council of Foundations, American Society of Association Executives and Association of Fundraising Professionals, petitioned Senate Finance Committee Chairman Max Baucus with a cogent, collaborative letter urging preservation of the deduction. It has been terrific to see non-profit and philanthropic infrastructure groups unite and, for the most part, speak with one strong voice.
However, there is a danger of the voice of philanthropy being muffled in the larger debate over health care reform to which the limit on deductions has been--at least so far--inextricably linked. And, let's face it, health care reform is sufficiently important that it should dominate the airwaves. But, if the charitable deduction limitation becomes law as a tradeoff for changes in our national health care system, let it not transpire because philanthropy neglected to weigh in forcefully one more time before the vote.
The importance of non-profit infrastructure groups weighing in on this issue cannot be overstated. However, there's nothing more compelling than individual grantmaking foundations and charities articulating poignantly how such a limit on deductions may inhibit the capacity to serve people in the policymaker's own backyard.
Paint the picture, and send it in today!
There's no shortage of opinion these days about what foundations should do differently to support nonprofits, which groups they should be funding, and how much they ought to pay out in grants. The commentary ranges from deeply insightful and soul-searching to borderline ludicrous.
This is not an environment that grantmakers have seen before. And while the chorus of columnists and policy wonks is full of suggestions (and in some cases, threats), the reality is that foundation trustees of private foundations, independent foundations, community foundation and corporate philanthropy have to make their own decisions about how to adapt to, and continue to add value in, a changed world.
It's not an "ain't nobody's business if I do," situation. Rather we should acknowledge that philanthropy is - and always has been - a personal thing.
I understand this completely, because the Southeastern Council of Foundations, as an association, has had to do the same thing. We recently launched our new strategic plan, and it paints a very new picture of our organization. Our strategic planning committee had to grapple with some tough issues about our relevancy to members and the value we provided. With their guidance, we came out of that discussion on the right path.
Just like our foundation members, we know we can't continue "business as usual," so we've made some changes. We've become more focused on building leadership in the sector, allowing our members to customize their relationship with us and with one another to a more detailed degree. We're also working strategically with other grantmaker organizations as partners.
Simply put, we're giving our members more ways to connect and more to connect to as they make very personal decisions about their grantmaking and their futures.
Luckily for us, the personal and professional relationships that members gain through SECF have retained - and even increased - their value during tough times. Connections, communications and camaraderie are valuable tools when one is struggling with touch choices. SECF is honored to provide those tools.
So, to all of you in the foundation community, I say: Only you can make the decisions about your foundation's operations and future. Don't let anyone tell you any differently. But don't make those decisions in a vacuum. Let your colleagues and friends at SECF know what we can do to help.
And on the same note, I know that growth and change are never really "complete," so I invite you all to take a look at our strategic plan and let us know what you think.
Michael R. Howland, CAE
President and CEO
Southeastern Council of Foundations
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