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Mapping The Philanthropic Ecosystem

The Ecosystem of Philanthropy

Who is part of your "better world" ecosystem? That is, if you want to create for yourself and those you love a better life in a better world, what other "players" impinge on you, for good or ill? And how might you, then, uplift both your own actions and the overall ecosystem so that a better world is possible? That is the line of thought that I have been pursuing within an informal network over the last several years. I will organize for my own use these observations under key names in my ecosystem.

Tracy Gary

Key actors in her vision are donor, advisor, and nonprofit. Key indicator of success is the number of dollars raised. Key driver of dollars raised is donor training to help the donor manage the planning process with advisors towards a more inspired, but also prudent result. As donors are trained to ask for philanthropic plans that very request will motivate more advisors to provide such plans.  Training for advisors would then be well-received, since tied to a practical result, that of meeting a real demand. Also, a key actor is the next generation, the children of the donor. If money goes to charity it might come at the expense of taxes first, but at some point it will come at the expense of inheritance. Hence, children must be raised and mentored in their roles as carriers on of a giving tradition. Nonprofits on this model become the convener of the appropriate training and conversation and network.

Tracy and I will present this vision to Advisors in Philanthropy at their Annual Conference next week. The following week I will present a version of it to Southeastern Council of Foundations.  We do have some early success stories. A number of other professionals have expressed interest in this way uplifting the philanthropic ecosystem.

Catherine Austin Fitts

A former investment banker, and former assistant director of HUD, Catherine seems to have stumbled upon the dark side of money and become for awhile an "enemy of the state," as she puts it with a smile, suffering the tribulations of Job, as a lesson in civics for herself and others. She is not keen on philanthropy, because she has seen where money, in certain cases, comes from, with whom it consorts behind the scenes, and how brutally those who control so much of the world's money and power behave when their insider games are outed or challenged. She has seen philanthropy used as cover or cleanser for the reputations of people who should probably be in jail for financial fraud, extortion, drug running, betrayal of the public trust, mere graft, or high crimes and misdemeanors. She also sees that philanthropy will be tolerated as a cleanser as long as it remains both upbeat and ineffectual. Philanthrocapitalism is also safe because it does not challenge, in fact personifies the hegemonic game.

You might think, then, that while Tracy is liberal that Catherine is a revolutionary Marxist taking her cue from Che. In fact she is a Christian Conservative taking her cue from Adam Smith and Jesus Christ, which makes her a dangerous mind. She is not asking capitalism to give way to socialism. She is demanding that capitalism live up to its own founding ideals: financial transparency, honest  book keeping, the rule of law, and the prosecution of criminals regardless of their wealth, rank, philanthropy, connections, or access to armed force, or criminal networks.

Catherine urges us to create a better, more financially intimate world, by withdrawing wealth from the rigged and gamed financial markets and reinvesting in places governed by the rule of law, maybe New Zealand, or maybe your home town, or among a circle of friends who have farms, small businesses, or a local bank.  As an investment banker she thinks bigger than that too, asking who will own the water supply, for example, in your town? Who will commandeer the food supply? Might we not form investment pools that would allow local decision makers to steward such resources for the good of the town, rather than, say, Nestles?

You can see that this is not your idea of "philanthropy," but the actors named by Catherine (the drug dealers, the slum lords, the corrupt governmental officials gaming the sub-prime mess, the investment bankers bringing for profit prisons to market, the private bankers who own the Fed, the governors owning prison stocks and passing "three strikes you're out" laws, the shadowy actors trading drugs for arms and arms for hostages,  the corrupt accountants of both business and government, the blackmailers and hit squads operating here and abroad to silence those who out the dirty game) are part of the same ecosystem in which philanthropy goes about its upbeat work.  Some capitalist like Boverton Beaver who has made billions out of buying companies in, say, the liquor business, gambling stocks, the porn business, or armaments, or in for profit prisons, might call himself a Double Bottom Line Social Investor and might start a double bottom line bakery employing at low wages the convicts on parole from the prison he owns up the hill from the ghetto, blighted by the drug lord whose Harvard educated son sits with Boverton on the board of the local hospital, or the home town newspaper, or serves on a Blue Ribbon Commission studying urban poverty.  That philanthrocapitalist might then endow a business school, or a chair in social venture capitalism, or might fund a DC Think Tank on Engaged Philanthropy, or on Pro-Market Public Policy, or might hire out the writing of any number of white papers and scholarly studies on metrics for double bottom line firms.  All this might then be applauded by leading philanthropy bloggers who, in their business life, consult to the banks and the brokerage houses with their captive philanthropy departments catering to private wealth from sources both light and dark, or who make their living managing Boverton's money. So the world closes back on itself in an ecosystem in which the herbivores, the carnivores, and the hominids thrive and prosper - up to a point, though that punctuated equilibrium is far from optimal from the standpoint of human flourishing. 

H. Peter Karoff, Amy Kass, Bill Schambra, and others Devoted to the Liberal Arts

What other actors? What are we leaving out? How about the teachers, writers, artists, prophets, and thinkers who are the masters of our spiritual, intellectual, ethical, and cultural traditions? (If you are not familiar with such figures you might think instead of Star Wars or Marvel Comics or Grand Theft Auto or the Matrix; those may be close enough to wisdom, if that is all you have and you don't know the difference.) If our better world is to be guided by what T. E. Hulme called "the best that has been thought and said," then we must listen to voices of the graces, or the holy spirit, or the muses,  or the voice that speaks out of the thunder, or the still voice we have been ignoring, or whatever one wishes to call that voice that rises in us when we are obedient to what is greater than ourselves, what is most alive and life-giving in our traditions. I could go on at great length on this point. Eloquence trumps power. The pen is mightier than the sword. Love conquers all. And the dead shall rise into eternal life, dead or not, as they live on within the tradition they would not betray, even at the cost of their own life, the ultimate gift.  As different as are the three figures mentioned above they share an almost helpless love for the life of the mind and of the spirit. When they discuss giving, it is within the shadow of Mt Ararat  within eyeshot of the ruined garden. I am not implying that they would get crossways with worldly wealth or power. We catch more flies with honey than with vinegar.

Phil to Thee

Well, you can see that the company I keep makes my head ache and buzz.  What I come down to is this: Whatever is the correct map of the ecosystem in which we live, whatever actors you see, or think you see, whichever you name, or fear to name, whatever your personal resources, you cannot blink the questions:

1. What kind of person do you want to be?
2. In what kind of world?

As you meditate on those questions, you will need your own vision of success, and a realistic model of your current situation - whether upbeat or dark or chiaroscuro. Given that vision of a better life in a better world, and given your assessment of what you are up against, you will have to make your own decisions, in the light of the traditions that speak to you and through you, as to how you will deploy your money, your time, your attention, your life energy, and your love within a risk profile that includes your assessment of the probability of success or failure under conditions you can barely discern. Each of us can see only a little.

Best Practices within a Learning Community

As we find our way, across this landscape, let us share what we see, share what we learn, mapping our terrain, and sharing the paths that lead out of the dark wood into the light. As you address the two questions above (and they cannot be evaded for the evasion itself is an answer), consider sharing what works and does not work so that we can collectively do better than we could alone. I am trying to take that approach here sharing my notes on what I am learning, and hope you will share as well, whether through a note to me, or on your own blog, or however you wish.  Perhaps if we live in truth, and speak what we know, and look out for each other, we  not only ameliorate specific ills,  and prosper in our own lives, but also uplift the overall ecosystem of which our efforts individually are but a tiny part. 

The Essence of Nonprofits?

Nonprofit Assistance Fund in MN lends money to nonprofits. In recent posts NAF has reflected thoughtfully on emerging trends in philanthrocapitalism and what the "essence" of a nonprofit might be.  Maybe the essence is that human beings are social creatures for whom certain social virtues like kindness come naturally (along with vices like greed, hypocrisy, spiritual pride,  and lust for power). Perhaps the unique thing about the nonprofit world (including the arts and private acts of generosity among family, friends, and neighbors) is that public goods lag private goods in a hyper-capitalist economy and that some people will indeed make significant sacrifices of time, money, and ability, or of blood, or even of their own life, for a cause that they consider noble. Perhaps you could get towards an essence if you started from public goods, honor, and an ethic of stewardship. I have not seen so much of that ethos of good stewardship in the business sector, or in government recently.  If the  double bottom in social entrepreneurship line means stewardship, even at net personal cost, I applaud it. But I think social entrepreneurs want, generally, to have it both ways - do good and make out like a bandit. And I am afraid that leaves many worthy projects that do require sacrifice on behalf of others as the province of the nonprofit form or of taxation and government programs. 

In the Market for Altruism

Speaking of supply and demand curves for altruism and where they intersect, I would think that with the huge demand there would be more supply, but maybe not. It could be that the demanders of altruism are low on the funds needed to purchase it. (Via.) The beauty of markets is that justice is not a product of them.

The Market for Warm Glow

Todd Henderson and Anup Milani on Understanding Corporate Philanthropy, excerpted at The University of Chicago Law School Bogs:

The existing literature on public goods ignores the role for-profit firms play in this market, which we call the market for altruism. Once the demand and supply for altruism is understood, asking why firms are philanthropic becomes about as meaningful as asking why Ford produces the Explorer or Apple produces the iPod Nano.

Facilitating Gifts of Stock to Donor Advised Fund

Better to give appreciated stock and than cash, since you can avoid realizing the gain in the stock. But,  is it worth the hassle of transferring the shares to the charity? Jack Siegel at Charity Governance had an "aha." He set up a donor advised fund at Fidelity:

It took about five minutes to set our donor-advised fund up. Several days later, after we knew how much money we gave to charity last year, we transferred marketable securities equal in value to that amount to our donor-advised fund. Of course, we selected our lowest basis stock. If you have an account at Fidelity, all you have to do is fill in the form on screen.

Then from the fund Jack could make his donations to the charities of his choice. I wonder if Fidelity has an advantage here over community foundations? Would it have been as quick and easy to transfer stock to a donor advised fund at a community foundation?

Social Markets

Socialmarkets offers donors a leader board of nonprofits with their social return on investment denominated in dollars. Here is a sample rationale:

We believe that good charity websites should always help non-profit organizations produce great results. To help donors understand these outcomes, we condense them into a single number in dollars that we call the social return on investment (SROI). A high SROI on a donation means that the nonprofit was successful at reaching the goals/outcomes they specified in their listing.  This indicates that your donation helped to benefit society.  SROI is a way of assigning a dollar value to that societal benefit.

For example, suppose you donate $100 to an eviction prevention program that will help keep one family in New York City from being evicted from their apartment for 12 months. We know that the SROI for such a case is $36,000, which is how much it would have cost New York City to house this family in temporary housing for 12 months if they had been evicted. Assuming that it cost $4000 to prevent the eviction, your return would be calculated as follows:

Not bad for a 900% social return on your donation!

On socialmarkets blog I am gently taken to task for my impatience with the business logic run amok in social investing. I do not really mean to disparage the people involved, or their best efforts at doing good. We all give for our own reasons, from within our own world view and outlook.  If this kind of math motivates givers, more power to them. As a former teacher of literature, I keep thinking of Swift's Floating Island of Lagado. What I get from the popularity of social market terminology is that there are many people for whom business is almost a secular religion. It serves in lieu, it seems, of an ethical, literary, or explicitly political framework as a comfortable way to make giving decisions. We make good giving decisions by comparing two numbers in the context of other numbers with may be larger or smaller.  In a field that may not admit of such simplification, the math becomes somewhat metaphorical, but it stands for an almost touching commitment to capitalism, and to the roles of analyst, manager, and investor. Beneath the math there is a desire to do good, and to do the most good possible with limited resources. I honor that. I also enjoyed their Manifesto. Not Marx and Engels, but still.   

Social Capitalist T Shirt

From VC Wear.

The Latest on Social Capital Markets from Jed Emerson and Joshua Spitzer

"From Fragmentation to Function (48 pages in pd): Critical Concepts and Writings on Social Capital Markets' Structure Operation, and Innovation," by Jed Emerson and Joshua Spitzer, From the Skoll Center for Entrepreneurship at the Said School of Business, Oxford University. The paper is compendious and scholarly, and towards the end charming. In the conclusion the authors circle about the core problem: people want different things; they don't agree about what a better world might be; one person's meat is another's poison; plus, people are complex and make decisions based on passion, prejudice, taste, faith, superstition, vanity, pride, and whim, as well as on reason. Some prefer the Circus to the Stock market, or Carnival to Wall St.  Some give to escape the charnal house of capitalism.  Hence the desire to create a reason-based social capital market that encompasses organizes and controls what we now call giving, or philanthropy, or benefaction (good deeds) is in effect conceptually flawed. It is an attempt to advance a business person's world-view, and sense of propriety, one that does not comprehend the fluid, multiplex, fractious universe of things we call giving or philanthropy very well. The authors don't say that, any more than would an Alchemist admit to a Prince that the well funded effort to transmute horse dung into gold will never work.  As one view of a better world, social capital markets has its place, but as the wrapper within which all views must find a home, with tables, graphs, and numbers, I don't think so. There will always be givers who despise the aridity of this vision. Jesus was no accountant. As Blake wrote, in his hellish proverbs, "The cistern contains, the fountain overflows." (For an enthusiastic review of the paper see Susan Herr at Philanthromedia.)   

Rebranding Activism as an Investment?

Lisa Ranghelli, Senior Research Associate, NCRP:

Perhaps organizing groups need to rebrand themselves to fit in with the new lingo of philanthropy. The phrase “community organizing” causes many foundation trustees to cringe in horror, as they imagine Saul Alinsky rising from the dead and banging down their door in the middle of the night. This visceral feeling about organizing prevents trustees from supporting good work on the issues they care most about. It works against their own self interest. Would they feel better knowing that they were investing in social entrepreneurs who can offer them a quantifiable return on their investment?

To what extent do we buy into the business-oriented language sweeping across the philanthropic sector, and to what extent do we push back?

Or, could we ask it this way: Is the language of social investing an indication that the philanthropist is politically conservative? Is the language of finance imposed on philanthropy precisely because it tends to denature political activism, and to undergird the worldview of a managerial elite in an ownership society?

Virtuous Local Capital

Catherine Austin Fitts:

Almost everything we need to know about the economy we learned when we were kids. If a growing percentage of the population eats bad food, drinks bad water, watches 8 hours of TV a day, gets no exercise and develops skills at printing currency, printing securities, dealing drugs, engineering financial frauds (big and small), putting young people in prison, manipulating media, engineering the excuses for more warfare, administering legal and financial systems and debating distractions, there is no hope. If, however, enough of us shift our time and investment to activities that are life giving and productive, miracles are indeed possible.

By "miracle," she might really mean miracle. She may be saying that virtue has a silent partner. In any case, she consistently suggests we take our money out of the global financial markets and invest locally, face to face with our neighbors. Likewise, she would have us disinvest our attention in the national media, and pay attention to what happens close enough to hand that our small efforts can make a big difference.