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November 2004

Winklevoss: Donor Managed Investment Account

Winklevoss patents technology and business process to let donors manage gifts.  How generous of Winklevoss! Why does giving attract these people? Don't they understand the commons? The spirit of thing? "Let's corner the market on giving." Great attitude. May Dante have the last word. (He's the guy collects Debts for the Holy Spirit.)

On the other hand, I may just be grouchy because I didn't think of it myself. I can see this Donor Managed Investment Account being very popular with both donors and the advisors who "control the case." Charities may have nothing to lose and something to gain  from providing these donor friendly vehicles.  Somebody is going to make a lot of money off this - so, hey, its a "win/win" situation, right? I just wish that the spirit of giving could figure a little higher in the overall scheme of things. Should we rejoice that we may soon have a billionaire who made his money off others folks gifts? Why not. This is America. But I do hope that some of that giving goes to develop a little more heart and little more soul in this wasteland of commercialism, I mean, Utopia.

A New Philanthropic Financial Services Industry?

William Drayton of Ashoka calls for a more robust capital market to support social ventures: Start up money, long term funding, investments as well as grants, bringing together social entrepreneurs with investors through financial services intermediaries.

In financial services so many clients are themselves entrepreneurs that you wonder why we have not been better at hooking up successful entrepreneurs with social venture opportunities. Entrepreneurs who cash out are givers, often enough. And you would think, given the chance, that they would enjoy investing their philanthropic capital in ventures, rather than plain dull grants. In developing such a market, a hybrid of forprofit and nonprofit, somehow we have to get the financial services reps and firms paid, while also working through the regulatory issues. A grant from a donor advised fund into a nonprofit venture for start up, or a loan from a foundation into a forprofit venture, is either of those  private placement? Can reps get paid on such, for making the market? What are the regulatory and compliance hurdles? What are the disclosure and suitability issues?

I sense that this market is on the verge of coming together. Firms have done well at asset gathering in philanthropic accounts, like foundations and donor advised funds; now how can they make a buck putting those dollars to work in grants, or ventures? Once the financial services firms figure that out, look for a major expansion, as reps seek out clients for such deals. The community foundations may be left wondering, "What the heck is this?" As dollars sweep around them from entrepreneurial donors, via profit driven advisors,  into philanthropic accounts inside the financial servicds firm, and then in grants and investment into the community bypassing the current philanthropic bastions.

Social class ain't what it used to be. Spiff up the white bucks, adjust the corsage, but the newcomers are looking for transparency, accountability, action and results.

Underdog Ventures

Underdog Ventures

has developed a new model of customized community venture capital funds, combined with  a model of customized philanthropy. Underdog Ventures partners with a group of investors committed to financial, community and environmental results. We create innovative and customized investments to meet the specific needs of each of our investors, each of whom has a dedicated fund that invests in areas that they choose.

And here is how their legacy fund works: A funder has put up the money to invest in businesses that build capital in the firm and in the community.

We invest only in companies in which the deal structure creates at least one dollar of philanthropy for every dollar of venture capital invested. Our investor has donated his proceeds from this fund to the Underdog Foundation.

A progressive social venture capitalist firm? Very interesting to see that combination of ideals and business savvy.

The Culture of File "Gifting"

Ever tried to explain to a six year old why boys like girls? Giving is like that. Some people have lived it and understand without explanation. Others create theories to explain the mystery. Web denizens seem to understand more often than most. Maybe giving is built into the ethos of the hyperlink itself, giving and receiving attention, flow, reputation. Maybe the web is a training ground for civil society, and a harbinger of a more giving society.

See Gifting and Technology by McGee and Skageby for a thoughtful discussion of the culture of file-giving, and sharing, on the web.

Under what circumstances, of markets, copyrights, and other social arrangements does the vitue of giving become a vice or crime? And is the good garnered by those arrangements off set by the loss of a vital gift culture? Can the two be balanced, by accountants and/or by the holy spirit?

Defunding and Refunding Charity

By Charles Storch11/8/2004 via COF List Serv in The Chicago Tribune

Even if the election map from Tuesday had come out far bluer, Diana Aviv would still be seeing red -- the color of ink on the federal budget for years to come.

The president of Washington-based Independent Sector, a leading coalition of foundations and non-profits, said she is focusing not on which party came out ahead but on how long a ballooning deficit will be tolerated on Capitol Hill. And she is concerned that budget-cutting hawks will be circling over entitlement programs and discretionary funds for social services.

Budget cuts make the needs greater. Tax cuts make the promotion of philanthropy to wealthy people harder by reducing the tax incentives. Compassionate Wealth must now make good on its promise to trickle down, or descend like Justice in a mighty torrent. We need not only more giving, but giving that goes to those in need, not just to nonprofits frequented by the wealthy. Maybe Hudson and Bill Schambra could do a study showing how Compassionate Conservatives are self-tithing for the poor. Better yet, rather than predicting it and waiting for it, let's do what we can, across the great divides to promote giving, and to help people make good on their Christian values, if they are Christian, or whatever values they have, so long as they are compassionate. Lest Christian values be only fire, brimstone, and smoke, and stink in the nostrils of an Angry God. We tax payers subsidize these conservative think tanks; let's get some value for the money.