Search Results for: gilded age

April 6, 2017 By Helen Brown

The New Gilded Age

The number of gifts of $10 million-plus at universities are at an all-time high, according to a Marts & Lundy study. Beyond lending just their names or faces to events, an increasing number of celebrities are putting in volunteer time and money for the causes they care about. And new forms of giving vehicles like LLCs are emerging to meet donors’ needs for flexibility. Articles about philanthropy are increasingly in the main stream news, describing how giving is changing our society – in fractal patterns. This week I’m delighted to welcome HBG Assistant Research Director Elizabeth Roma to the blog to help share her thoughts and expertise on our new Gilded Age.

Elizabeth Roma

When I started college in the mid-1990s, I had no idea what I wanted to study, but I knew that I liked to read and think. After taking a variety of core liberal arts classes during my freshman year, I concluded that majoring in English would allow me to spend four years doing just that, and I loved (almost) every minute of it.

I still like to read and think (and I bet you do too if you’re reading this blog), and it turns out that I managed to stumble into a job that allows me to do just that—and even get paid for it! (Side note for those soon-to-be liberal arts graduates—and their parents, siblings, grandparents, spouses, etc.: maybe prospect development is the career for you!) [Read more…]

June 20, 2019 By Helen Brown

Usufruct

Photo © Evelyn Simak (cc-by-sa/2.0)

I listened to a fascinating, highly recommended episode of the Vox podcast series “Future Perfect” this week that was embedded in an article called “Dead people leave billions in their wills. How long do we have to listen to them?”

The theme of the podcast – should foundations exist in perpetuity? – is a topic that has increasingly appeared in fundraising periodicals and in our HBG Book Club discussions of The Givers (David Callahan), Just Giving (Rob Reich) and Winners Take All (Anand Giridharadas). Each book has a slightly different angle on the topic, but generally the consensus is that endowed foundations and donor advised funds take money out of circulation that could be used to solve problems now.

And further, maybe it’s not just that problems could be solved now, maybe it’s a problem that, for some of them, the needs for which the endowments were established no longer exist. Or the original terms were just really repugnant to begin with.

For example

The Vox podcast entertainingly shares two stories illustrating those case scenarios. One story describes a Georgia pleasure garden built for the perpetual, exclusive enjoyment of a city’s white citizens. What happens when, 50 years later, a foundation’s trustees or a municipality are charged with re-examining a donor’s intent? (In the garden’s particular case, the municipality shoots themselves in the foot. Listen to the podcast to learn more.)

If times change but the purposes for which a foundation is established can’t (or don’t, or won’t) change, does it even make sense for foundations to be allowed to exist in perpetuity in the first place? What happens if the disease for which a perpetual trust is established to remedy is eradicated? Sure, we can say that the trustees just have to go to court to get the money freed up for another purpose, but as the New York Times reported, sometimes the trustees don’t actually want that to happen.

And that’s where usufruct comes in. The podcast presenters, Byrd Pinkerton and Dylan Matthews, interviewed Boston College law school professor Ray Madoff (no relation to the con man), who describes what the general feeling was in the days before Rockefeller and Carnegie-style foundations came into being. Here’s an excerpt:

Matthews: So Byrd, you promised me an explanation for why we allowed people to have trusts that last forever.

Pinkerton: Yes. So the first thing I learned from Ray is that is hasn’t always been this way.

Madoff: Historically we did not allow people to create their own donor-intent-preserved-in-perpetuity, right? We explicitly did not allow that for the first century after the country was formed. It was seen as aristocratic, it was not the American Way.

Pinkerton: We had literally just fought an entire war to establish democracy.

Madoff: These zombie entities that could live forever were seen as very disconcerting and not necessarily appropriate for a country that was supposed to represent the wishes of the people and that’s why Thomas Jefferson famously said that the world is held in usufruct for the living. And usufruct is a funny word, but what it means is life estate, that the world is to be held for the living for the time of their lives, and after that it is to be freed up for the next generation to hold the world as they see fit. And that was a very strong value of Jefferson and of a lot of the founders. The people in their time controlling the resources of their time for their time.

More generally, the word usufruct means having temporary access to another person’s (or entity’s) stuff, whether it’s money, or a private park, or some other benefit that you don’t actually own but you get to use, like that piece of clothing you borrowed with permission from your roommate’s closet. You get the benefit of it for a time, not for ever.

Things changed in America when the steel and oil and railroad barons started amassing more money than they could possibly spend, and public infrastructure increasingly needed upgrading. There was societal need and a sudden rise of income inequality in this first Gilded Age, but no mechanism or infrastructure for organized or institutional philanthropy was in place.

In modern history, nothing like this had happened before – commoners rising to the economic level of kings – and as far as the 1% of that age knew, based on history they would likely always be princes and the poor would likely always be paupers. An environment started to emerge that was more friendly to (or at least tolerant of) establishing charitable foundations in perpetuity to help keep the fringes of society’s infrastructure shored up.

So the rich (in the form of John D. Rockefeller), wanting to do something positive with this mountain of money, pressured lawmakers for change and eventually got it. The first endowed charitable foundation, The Rockefeller Foundation, was given permission by the US Congress to be formed in May of 1913.

And now here we are, today, discussing changing the rules

Over the past century, the establishment of foundations has undoubtedly made our society better. But the eke-ing out of 5% of foundation assets hasn’t gone a long way to actually solving the issues that face us. It’s increased endowments and given the folks managing assets meant for the underserved a good living.

Much of the commentary we’re seeing in op-eds, articles and books by philanthropy historians and thought-leaders during this second gilded age call into question this trickle of band-aid funding when bolder collaborations could take place. Some call for measured thinking while others are more strident, but the voices advocating for change are getting louder.

Some want endowed foundations to be a thing of the past entirely. Others call for a 100-year existence with mandatory sunsetting. And many (including myself) want greater transparency, protection for donors against misrepresentation and usury, and and at least a minimum donation requirement (or better – a maximum life span) for foundations and donor advised funds.

Now that we’ve had a hundred or so years of seeing the best and worst of the philanthropic foundation and the donor-endowed funds’ legacy, where will pressure for change come from?

Do we even want change? Are we used to perpetual, yet rationed, usufruct?

When change comes, I can’t imagine that it would originate with a state or federal government, and it probably won’t come from within the foundation world itself. Change would be unlikely to be broached by nonprofits who hold an uneasy power position as foundation-fund applicants.

But we’ve seen a movement start already with the creation of The Giving Pledge – donors committing to give away at least half of their net worth during their lifetimes. Maybe change could come from the donors themselves.

Or maybe it’s the press that will push our sector to shift our perspective? Anand Giridharadas, David Callahan and other journalists are gad-flying adjacent to the wealthy 1% and the third sector. Maybe change will come from the buzz they’re creating.

Or it could be a collaborative mixture of voices from inside and out of the nonprofit sector. Just Giving author Rob Reich is an academic at Stanford who most certainly relies on philanthropic support to fund his research.

And these were some of the last words I heard on the Vox podcast: “Future Perfect is made possible by a grant from the Rockefeller Foundation.”

January 4, 2018 By Helen Brown

Innovation in Philanthropy

Creativity abounds everywhere in the Third Sector, from service providers in the field, to fundraising offices managing more on a shoestring, to a new breed of funders (and well-established funders, too) thinking up new ways to engage with, spur forward, and support their philanthropic priorities. In this week’s article, HBG Senior Researcher Grace Chandonnet shares some of the interesting and creative ways funders are having an impact in the world today. ~Helen

Lately I’ve been thinking about the innovative ways that young entrepreneurs are actively engaging in philanthropy. As my colleague Elizabeth Roma writes, the philanthropy landscape is ever evolving and innovating and appears to be picking up the pace of change exponentially in recent years in what is being referred to as the New Gilded Age. Elizabeth touches on innovative philanthropic vehicles such as the Emerson Collective and the Chan Zuckerberg Initiative, as well as B-Corps and impact investing. [Read more…]

December 7, 2017 By Helen Brown

The Palm Beach Season

“Palm Beach – Flagler Museum Courtyard” Photo by Roger W via Flickr

This week, HBG Senior Researcher Kelly Labrecque takes us into the sunny world of the Palm Beach season, that period of time when the wealthy leave northern climates and head to the tonier parts of Florida. The charity ball scene this year will be very different from years past – what will it mean for the nonprofits who benefit from them? ~Helen

As temperatures in the Northeast drop below 40 degrees, so begins the migration of the wealthy to their seasonal homes to wait out winter. Perhaps the most famous of these destinations is Palm Beach. Part of an 18-mile barrier island in Southeastern Florida, the town is known for its pristine beaches, mega-yacht clubs, five-star restaurants, PGA-rated golf courses, and elite equestrian facilities.

For more than a century, Palm Beach has attracted and played host to the world’s rich and famous. While there, these “snowbirds” generate millions for charity and the local economy. As a result, charitable organizations have come to recognize Palm Beach as a philanthropic hub for the cultivation and stewardship of major donors. [Read more…]

August 3, 2017 By Helen Brown

Another day, another hundred million dollars…

This week on The Intelligent Edge, HBG senior researcher Rachel Dakarian provides a window into the ongoing discussion that members of the HBG Book Club have had recently over our first shared book. I think in the beginning we thought that we’d all read this useful book, share our thoughts weekly, and then go back to our work. What’s actually happened has been a lively, ongoing, daily chat-room discussion as we toss articles to each other with comments of “hey, read this! It’s just what we were talking about yesterday!” punctuating our times between book club meetings. Rachel expands on our latest discussion beautifully in this week’s article. We’re interested to hear your thoughts as well! ~Helen

“Carnegie 1903” Drawing by Louis Dalrymple

As you may have noticed, ours is the era of the mega-gift. This trend of non-stop blockbuster giving has left many reeling or salivating – not to say that the two are mutually exclusive, nor will this trend be ending any time soon. Wealth and philanthropy are often perceived to fit hand in glove, but we prospect researchers know firsthand how difficult it can be to verify wealth and encourage charitable giving. [Read more…]

June 15, 2017 By Helen Brown

Gorilla Philanthropy

Art by Lieven Van Melckebeke

As I mentioned here on the blog a couple of weeks ago, a growing number of us on the HBG team are reading David Callahan’s latest book, The Givers; Wealth, Power, and Philanthropy in a New Gilded Age, and we meet weekly to talk about the latest chapter we’ve read.

Our discussions start with the book but we usually veer into the news of the day, pulling in observations from relevant and related articles from the New York Times, the Stanford Social Innovation Review, HistPhil, and more. [Read more…]

May 25, 2017 By Helen Brown

That work book

You honestly do want to read it. You spent the money on it. It’s just sitting on your desk or your shelf.

Very innocently. But making you feel guilty.

That work-book you bought.

I’ve got a few books like that on my office shelf. Some that I’ve started and abandoned after an interested afternoon, and others that I haven’t even cracked open yet. (but I will! I swear!)

But now, a solution.

Last week, some of my HBG colleagues and I – independent of each other – watched a vidcast of David Callahan and Emmett Carson in a fascinating, spirited, and sometimes provocative debate sponsored by Philanthropy New York. Callahan is the founder and editor of Inside Philanthropy, and author of the new book The Givers; Wealth, Power, and Philanthropy in a New Gilded Age. Carson is president of the Silicon Valley Community Foundation, the largest community foundation in the world, with $8 billion+ in assets. [Read more…]

August 13, 2020 By Helen Brown

Questioning philanthropy

With so many nonprofit organizations needing funding fairly desperately right now, this might not seem like a particularly great time to critique philanthropy and philanthropists. That hasn’t stopped people like Anand Giridharadas, David Callahan, Rob Reich, Ben Soskis, Alan Cantor, the folks at Mother Jones, an anonymous op-ed writer in The American Conservative, and many, many others.

And the critics have a long list of grievance: Foundations have too much power. Foundations don’t give away enough. Billionaires are stingy. Billionaires are stepping up, but not enough. Wealth inequality is distorting philanthropy. It’s imperiling democracy. DAFs are the best thing since sliced bread. DAFs are evil.

It feels like there’s a crescendo of criticism lately. And they’ve got a point – there is so much more need, the inequity gap is an increasingly yawning crevasse, and trillions are locked away in philanthropic vaults, ticking up interest and income for investment offices and institutional sponsors. And there are billionaires who could change the course of poverty/hunger/you-name-it with one check (and some, like MacKenzie Scott, who seem to be actually trying).

As they have for over a generation, medium and large nonprofits are focused laser-like on that top tier of prospects and those prospects’ assets are growing by the second, even during this pandemic. Some because of the pandemic. Sometimes I think that small triangle at the top of the pyramid is going to separate and blast off like the SpaceX Dragon.

A small voice in me wonders if prospect development has played some role in this problem of declining donor numbers. Because of our part in the fixation on that nose-cone.

And, to be fair, it has made practical sense, right? When bank robber Willy Sutton was asked why he robbed banks, he said “because that’s where the money is.” Well, yeah.

Have we been myopic?

So yes, we’ve focused on the richest of the rich because they’re the ones with the most money to give away. But is that one (of the potentially many) reasons why our nonprofits have shrinking donor pools? Because we haven’t spent the time to identify and involve the next generation of donors because the low-hanging fruit was just so much easier?

What about the next tier who may not be able to make 7-figure gifts now (or ever), but could make multiple 5 or 6 figure gifts over a lifetime? Have we in PD not done our duty to insist to leadership that those prospects are worth the work so we can ensure that fundraisers working at our organization in 10 years’ time have great portfolios to work with?

Is the scarcity mindset that deeply entrenched in our sector’s collective psyche that nonprofit leadership doesn’t feel it can take the long view to ensure that their nonprofit will be here in 50 or 100 years and needs to go for the quick wins now?

Or, to play devil’s advocate, in this increasingly unequal world is it more expedient (and ethical) for us to have stayed focused on the top of the pyramid to the…maybe not exclusion, exactly, but certainly decreased emphasis on that important second tier? I wish I was sure. That small voice gets louder these days telling me “no”.

Fortunately it’s not an either/or choice. Those critics are airing out the Third Sector’s dirty laundry and it doesn’t smell too rosy. So what we have here is an opportunity for all of us, particularly in prospect development.

So what can we in prospect development do?

We have to start involving people below the Forbes 400 level – now – for all kinds of reasons.

First of all, although their bank accounts are growing at astonishing levels and their numbers are creeping up slowly, ultra-high net worth individuals (UHNWI) are still a tiny subset of the general population. Also they tend to give their support exclusively to large, well-established institutions (the equivalent of the Forbes 400 of the nonprofit world).

Second, I don’t know of too many nonprofits whose constituencies are exclusively over 60, male, and white. All-white boards may have worked in the 1970s, but we all know that style of board should have died out long ago. The fact that the status quo has lasted this long is frankly lazy and embarrassing. Female and BIPOC representation amongst trustees, volunteers, donors, and fundraisers, has to increase and fast in order for nonprofits to stay relevant (and afloat).

And third, donors have an increasing number of giving choices that completely bypass nonprofits and go straight to the recipient. Let me repeat that – donors are bypassing nonprofits entirely (read the embedded-linked article in that last line). Or they give money to nonprofits through vehicles like Facebook, which cuts out the nonprofit/donor relationship. Right now, when people can’t get out to volunteer or to attend events, these options are a way for mid-level donors to make a direct impact. This makes prospect identification, philanthropic-interest research, and engagement all the more difficult for an increasingly important demographic.

And although they may not be 100% correct, the critics care enough about the success of our sector to venture an opinion and point out where we need to fix things.

As a prospect development professional, I can’t fix DAFs, or foundation payouts, or wealth inequality, or the tax code. But there are many things we definitely can do to make our sector – and our own nonprofits – better. And that starts with making the pie bigger.

Elbow-grease prospecting and segmentation are even more critical right now. There are opportunities in every single fundraising database to be found through analytics and wealth screening, peer networks and philanthropy. There are common-sense ways to find new or previously overlooked donors in the communities where we operate and that we serve.

As an industry, we need to figure out how to present newly-identified prospects in such a way that fundraisers will rush to set up a Zoom call. And managers need to find new ways to motivate fundraisers to do that. Great prospects sitting in a portfolio growing cold are the very worst kind of waste. Internally we need to discover ways to communicate excitement and opportunity.

Something that’s been exciting for me is a project we’re working on right now within our Data Insight team: identifying the ways that the research tools we use don’t identify (or appropriately weight) female and BIPOC prospects and building up our own custom appends and methods to counter those deficiencies for our clients.

I’d love to hear your thoughts about any or all of this.

Search Results for: gilded age

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