Wednesday, July 23, 2014
Writing in yesterday's Chronicle of Philanthropy, Pablo Eisenberg, a senior fellow at the Center for Public and Nonprofit Leadership at the Georgetown Public Policy Institute, calls on nonprofits to start a campaign to ask Congress and the IRS to curtail excessive trustee fees paid by nonprofit foundations.
According to Eisenberg, "[t]he tens of millions of dollars that foundations pay to trustees every year is a total waste of money that could be used to finance needy nonprofit organizations. He contends that:
Fresh concerns about those fees were raised when the news become public that the Otto Bremer Foundation, which last year gave $38-million in grants, had paid its three board trustees more than $1.2-million in 2013. So egregious was the payment that Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, requested an immediate investigation by the Minnesota attorney general.
The Bremer trustees had fired the foundation’s executive director, leaving them totally in charge without any accountability mechanisms in place.
Data about the total amount trustees are paid are hard to come by, but a Chronicle of Philanthropy survey in 2011 found that 38 of the nation’s 50 largest foundations paid a fee to their trustees amounting to a total of $11-million.
He also reports that
[a] 2006 Urban Institute report about the compensation practices of 10,000 of the largest foundations based on 2001 tax returns found that 3,400 of the foundations had paid a total of almost $200-million in trustee fees.
Finally, he reveals that an earlier study of 238 foundations he conducted with two of his graduate students at Georgetown University in 2003 revealed that the foundations "had paid more than $44-million in trustee fees. About two-thirds of the 176 largest foundations compensated their board members, while 79 percent of the 62 smaller foundations surveyed paid their board members."
On the basis of this sample, Eisenberg and his students estimated that foundations throughout the country had paid more than $300-million in trustee fees.
That is a lot of money. Moreover, says Eisenberg, it is infuriating:
What has infuriated foundation critics and many nonprofits is that foundation trustees are among the wealthiest and highest-paid individuals in the country. As Aaron Dorfman has noted, most foundation trustees would take on their duties even if they weren’t paid. Most other nonprofits don’t pay their trustees, after all.
But habits die hard. Many foundations maintain that it is important to offer fees as an incentive to busy corporate and wealthy individuals who might otherwise not give their time. And, they add, it is difficult enough to recruit topnotch board members; fees just make the process easier. The corporate culture that believes "time is money" is a tradition that lingers on.
Eisenberg admits, though, that annoyance at the practice of trustee fees has not yet morphed into sufficient energy and public pressure that could produce some changes. Neither philanthropic trade associations, philanthropy roundtables, nor regulators and legislators appear ready to do something about the excessive fees. Hence, Eisenberg has a solution: nonprofits should stasrt a campaign to have Congress and the IRS curtail these excessive trustee fees. Eisenberg concludes:
Nonprofits should start a campaign to ask Congress and the IRS to curtail excessive fees. Almost all nonprofit groups hungry for new dollars should be willing to support the idea, and how could politicians be opposed to the idea that more money goes to communities than affluent trustees? Now we just need some leadership to get the movement going.
Will the nonprofits respond? Time will tell.
The Nonprofit Times is reporting that the search for someone to fill the shoes of retiring founding dean Eugene R. Tempel at the Indiana University Lilly Family School of Philanthropy has been narrowed down to two candidates.
The Times reports that while the university will only confirm that the search is ongoing and the intention is to have a new dean by January 1, 2015, the Times has information that only two candidates -- neither of whom is from Indiana University -- remain.
The Times continues:
Multiple sources have told The NonProfit Times that the process has not been as smooth as was expected. In fact, there has been some consideration as to under what terms Tempel might stay on for up to one more year if the new dean is not selected soon, according to multiple sources within the university and search process.
The search committee presented candidates to Charles R. Bantz, Ph.D., chancellor of the Indianapolis campus, known as IPUI since it is shared with Purdue University. There were three finalists but one of them, from a university in California, has withdrawn his application, according to sources.
Andrew R. Klein, J.D., chair of the IU Lilly Family School of Philanthropy selection committee and dean of the IU Robert H. McKinney School of Law, disputed the idea that the search has not gone as smoothly as hoped. He said the plan was to present a pool of candidates to the administration by mid-summer and that has happened. He said eight candidates were reduced to “those who came back to campus.”
He declined to confirm the number of candidates who made campus visits and the number of candidates still in the running for the coveted position in nonprofit academia. He cited a confidentiality pledge to the candidates who are still employed. “Chancellor Bantz is in consultation with President (Michael A.) McRobbie about the search,” he said. “The appointment of any dean is ultimately made by the Board of Trustees of Indiana University,” Klein said. “I am not involved in the conversations at this point, but I am certain that Chancellor Bantz is consulting with President McRobbie to make sure the administration presents a candidate to the board in which they both have confidence.”
The Lilly Family School evolved from the internationally known Center on Philanthropy of the IU-Purdue University campus in Indianapolis, Indiana. The school encompasses and expands all of the previous academic degree, research and training programs at Indiana University, including The Fund Raising School, the Lake Institute on Faith & Giving, the Women’s Philanthropy Institute and International Programs.
Tuesday, March 25, 2014
Today's Philanthropy News Digest is reporting that three Foundations have over the last three days issued new Requests for Proposals (RFPs):
The National Art Education Foundation, the philanthropic arm of the National Art Education Association (NAEA), is seeking applications for its 2014 Art Educator grants. Through the grant program, the Foundation will award grants of up to $10,000 to NAEA members for programs that support classroom-based art education. Only NAEA members are eligible to receive the awards. The deadline for submitting an application is October 1, 2014.
Meanwhile, the Chicago-based Harpo Foundation is inviting applications for its 2014 Emerging Artist Fellowship. Under this program, one emerging artist will receive a one-month residency at the Santa Fe Art Institute in Santa Fe, New Mexico. The application deadline is July 5, 2014.
Finally, the Vilcek Foundation is inviting applications for the 2015 Vilcek Prize for Creative Promise in Fashion. This program will actually award three prizes of $50,000 each to young, foreign born fashion professionals living and working in the United States who demonstrate outstanding early achievement. The foundation encourages designers, stylists, make-up/hair artists, image makers (including fashion photography, film, animation, and illustration), curators, and writers to apply. The application deadline is June 10, 2014.
Tuesday, January 28, 2014
The California Historical Society is accepting nominations for the 2014 California Historical Society Book Award.
According to today's Philanthropy News Digest, the Society will award a cash prize of $5,000
to a book-length manuscript that makes an important contribution to California historical scholarship and adheres to high scholarly standards while being lively and engaging to general readers. In addition to conventional works of historical scholarship, other works eligible for consideration include biographies, collections of letters or essays, photographic or artistic studies, creative nonfiction, and other ways of informing the mind and engaging the imagination in an understanding of California’s past.
The winning manuscript will be published in both print and e-book format, and the society will pay for an awards ceremony, promotion, and an author’s tour.
Eligibility and application guidelines are available at the California Historical Society Website.
Tuesday, October 22, 2013
With a hat tip to the TaxProf Blog, I simply must post regarding the most recent compelling and ground-breaking work done by the readers of Freakonomics. (Should H&R Block Hire Models to Increase Charitable Giving?) Freakonomics updated its readers on its fundraising campaign for Freakonomics Radio, as follows.
Your comments and e-mails were also a great window into a better understanding of what makes someone want to donate to a given cause or not. You pointed out incentives we overlooked, or overvalued, or undervalued. ... Here, for instance, is one my favorite comments, from a reader named Eric Kennedy:
[Y]ou forgot a primary reason why people donate to charity: to impress their attractive tax preparers. I’m not kidding. I’m very attractive and worked as a tax preparer for two years. I’ve seen this first-hand. I now find myself considering the impression I will make on my attractive tax preparer. The most effective way to boost nation-wide charitable giving, would be to staff H&R Block with models and encourage them to make comments about the size of people’s annual donation amounts.
I must agree with Mr. Kennedy's assessment, although I will neither confirm nor deny whether I have participated in the preparation of tax returns that contain significant charitable deductions...and that fact would, of course, have no bearing on my scholarly assessment of Mr. Kennedy’s observations in this regard.
Friday, October 18, 2013
On Wednesday, October 23, 2013, ALI CLE is offering a webcast entitled “Advising Nonprofit Organizations: Complying with Limits on Compensation, Benefits, and Other Payments.” The promotional material describes the program as follows:
[T]oday’s nonprofit organizations are under heightened scrutiny by regulators to ensure compliance with federal and state laws. Excessive compensation and other benefits given to board members, trustees, officers, or key employees can trigger the private inurement prohibition, putting the nonprofit at risk for intermediate sanctions or even losing its tax-exempt status. As a lawyer for a charity or member of its board of directors, what are your responsibilities to ensure that its income and assets don’t unreasonably benefit an “insider”?
In Advising Nonprofit Organizations: Complying with Limits on Compensation, Benefits, and Other Payments, our faculty will explain what legal advisors to, and members of, a charity’s board of directors need to know to comply with IRS and state guidelines on excess benefit transactions, including reporting and governance issues.
The attorneys teaching the CLE are Willard L. Boyd, III of Nyemaster Goode, P.C. (Des Moines, Iowa) and Lisa A. Runquist (Northridge, California).
Sunday, September 29, 2013
Last Wednesday I blogged about Georgetown Law's finiancial boot camp. Today I write to report that Georgetown is not the only law school seeking to give its students a sense of the business world. The National Law Journal is reporting that "a growing number of law schools are borrowing a page from the MBA playbook and adding courses intended to give students a foundation in business, in addition to the law." The other schools profiled in the Journal report are Elon University School of Law, University of Pennsylvania Law School, Harvard Law School, University of Michigan Law School and University of Colorado Law School.
According to the Journal, the business courses now taught at these law schools are an outgrowth of the rising demand for law graduates to have some real-world legal experience. In the past, legal educators believed that law students could obtain this experience through clinics and externships. Not any more. Legal educators
...are now starting to take a broader view of what, exactly, prepares a student to practice law. They're realizing that basic business and management skills would prove useful whether the student ends up counseling corporate clients, goes solo or works in a small nonprofit.
I applaud the new trend. May it last well into the future.
I have enjoyed blogging this past week. Tomorrow, one of my colleagues will take over the blogging duties. I thank my recently-graduated former student, Ibukun Adepoju, for helping me spot stories for blogging. May she have peace of mind as she awaits the results of the July bar exam.
Saturday, September 28, 2013
Grantseekers need the assurance that grantmaking foundations are good fits for their organizations. How can they ensure this good fit?
According to a tip from The NonProfit Times,
The information summarized in a funding database provides a glimpse of a private foundation's priorities and giving habits. But savvy grantseekers know they need the full picture before making contact or submitting a grant proposal.
Foundation websites can fill in the missing pieces, but many foundations don't have websites. What's the grantseeker to do?
Barbara Floresch, director of The Grantsmanship Center in Los Angeles, CA, has a proposal for grantseekers: "first, use a database to identify foundations that seem like a good fit for your organization. Then, if they don't have in-depth websites, go to Guidestar.org, set up a free account, and take a look at the foundation's recent tax returns (990-PFs)."
According to Floresch:
Foundation tax returns are public information and they’re invaluable to grantseekers. They provide not only information about assets and officers but also a complete list of grants awarded during the fiscal year – including the amount of each grant and the recipient’s name and location.
Examine each foundation’s 990-PFs to determine whether that foundation is truly a good fit with your organization’s work. For starters, look at several fiscal years to determine:
- The average amount of funding granted to organizations similar to yours;
- The average amount granted for the area in which you'll seek support (i.e., youth services, education, the arts, the environment);
- Geographic preferences in grantmaking; and
- Whether the foundation provides multi-year funding.
And what is the grantseeker to do with this information? Use it to construct a well-informed plan of action and a well-targeted request for support. While the 990-PF is not the place to start one's research, it can refine the grantseeker's understanding of a grantmaker. Says Floresch: "When it comes to winning grants, thorough information is essential. The 990-PF can help you fill in the blanks."
Thursday, September 26, 2013
The Washington Post is reporting that two private universities in the District of Columbia have announced landmark donations. Trinity Washington University will receive $10 million for a new academic building, and Georgetown University will receive $100 million for a new school of public policy. The gifts set records for each school.
Speaking about records, the Post is also reporting that among private institutions, the largest gift on the Washington Post’s list is $350 million to Johns Hopkins University. In the public sector, the largest is $100 million to the University of Virginia. The largest gift to a single U.S. college or university was $600 million pledged in 2001 to the California Institute of Technology (Caltech).
The Post's article leads me to wonder about donations to colleges and universities. Why do people -- ordinary citizens -- donate to education? Why are some institutions consistently able to raise more funds than others? The Post addreses these questions as regards Georgetown and Trinity Washington:
Georgetown, the nation’s oldest Catholic university, is highly selective and draws students from across the country. Its alumni can tap significant pools of wealth. Trinity Washington, a Catholic women’s school, is less selective and serves a large number of students from low-income neighborhoods in the District. But Trinity has some powerful alumnae, including House Minority Leader Nancy Pelosi (D-Calif.) and Health and Human Services Secretary Kathleen Sebelius.
Of course, some institutions are able to raise significant amounts because their alumni are pleased with the education they received.
Friday, July 19, 2013
James Piereson (Manhattan Institute) has published an Opinion piece in the Wall Street Journal highlighting the increasing dependence of many charities on government funding, particularly federal government funding. While this trend will not be news to anyone familiar with the funding sources for the charitable sector, his particular criticism is the alleged connectino between the lobbying activities of charities and this funding. For example, he criticizes Independent Sector for purportedly "suppport[ing] a tax increase in exchange for President Obama's agreement to maintain the charitable deduction."
Whether there really is much of a "charitable-industrial complex" that seeks to use government for its own advancement and enrichment can be debated. What cannot be debated is that the growth of government at all levels means that few charitable organizations can responsibly fulfill their missions without at least considering whether to take advantage of available government funding; even religious organizations, such as Catholic Charities, the U.S. Conference of Catholic Biships, and World Vision, receive funding for some activities according to the piece. The difficult choice for charities is, of course, whether the cost of accepting such funding in terms of strings and conditions is worth it, and for government what strings and conditions should and can it attach. The Supreme Court recently reaffirmed in Agency for Int'l Development v. Alliance for Open Society Int'l that there are significant constitutional limits on those strings, at least when speech by the recipient charities is implicated. What prudential limits should apply, however, to ensure both accomplishment of government goals and sufficient independence for charities is far from settled.
Tuesday, January 29, 2013
Our friends at the Committee on Nonprofit Organizations of the Business Law Section of the ABA have issued a call for nominations for the 2013 Outstanding Nonprofit Lawyer Awards. Each year, the Committee recognizes outstanding legal professionals in each of the following categories:
- Attorney (principally for outside counsel to nonprofit organizations);
- Nonprofit In-House Counsel;
- Young Attorney (under 35 or in practice for less than 10 years);
- Vanguard Award (lifetime commitment/achievement).
A link to the Committee's website with additional information can be found here. At that website, you can find the nomination form and a list of past recipients. The deadline for nominations is March 15, 2013, and the award winners will be announced at the Business Law Section's Spring Meeting in Washington, D.C. in April. Please direct all nominations and questions to William M. Klimon, Caplin & Drysdale, One Thomas Circle, NW, Suite 1100, Washington, D.C. 20005, by phone (202) 862-5022, by fax (202) 429-3301, or by email firstname.lastname@example.org.
Thursday, June 28, 2012
The Chronicle of Philanthropy is reporting that its featuers editor, Holly Hall, will tomorrow moderate a panel discussion about this year's "Giving USA" report. The event will be held at the Hudson Institute's Bradley Center for Philanthropy and Civic Renewal in Washington, D.C. It begins at noon Eastern Time, and will be available via Webcast.
Tuesday, January 17, 2012
The Community Development Law Clinic that I supervise recently agreed to become a partner in UNC-Chapel Hill's Social Innovation Incubator. The Incubator will be a space on campus where student groups engaged in social enterprise and social innovation can get advice, capacity-building training, and back office support for their ventures. If the ventures grow to the point that they can be sustainable charitable organizations, the Incubator will assist them with the process of forming and launching a c3 organization. My law students and I will do some of the training and much of the legal work.
The concept is appealing for several reasons. One is the simple fact that the Incubator may bring some order and reason to what heretofore have been unruly (but often effective) groups of students who have charged off the campus to do work in communities of need. Too often they launch into their community projects blithely unaware of legal problems. They conduct potentially high risk programs without insurance or waivers, they run finances through their personal bank accounts, and, as often as not, they make no plans for sustaining the organizations after they graduate. The Incubator will provide support and guidance to help them avoid some of these problems.
There is, I believe, a potential downside to launching a campus based incubator. Far too often, bright young men and women on college campuses -- thetypes who come to campus with prestigious fellowships that are supposed to groom them as future leaders -- are told that one mark of leadership is forming a nonprofit organization. It's something they all seem to want on their resumes these days. Predictably, many of the c3 organizations these "young leaders" form wither and die as soon as the young leaders graduate and move on to law school or business school. Although the Social Innovation Incubator may prepare these impressive young folks for the legal (not to mention moral) responsibilities of operating nonprofit organizations, I fear that it may also legitimize the notion that all young people of promise and ambition ought to start one.
Thursday, December 22, 2011
The Nonprofit Quarterly reports on a dispute among members of a Hmong community center in Wisconsin. Individuals paid an initial $1,000 to become members of the organization. Included in membership privileges was the right to hold funerals at the facility. When the organization later fell into financial difficulty, it went back to the members and said they would have to contribute further to retain their memberships and the attendant rights. Some of the members sued, claiming breach of an enforceable contract.
What I find interesting about this case is the likely blending of law and equity. I tell my nonprofit law students that in the U.S. the strong trend has been toward resolving nonprofit difficulties and disputes through the application of corporate law, but that equity pops up at unpredictable times and in unpredictable ways. This is certainly true when it comes to disputes among members or between memberships and boards. The corporate law answer would be to look in the organization's governing documents to see what they say about members' rights and perhaps to assess whether any enforceable contract exists. Equity, however, would demand that the organization treat its members fairly.
In this case, the judge made the wise decision to send the parties to mediation. If all goes well, s/he will not have to decide whether to apply law or equity or, as often is the case, some jumbled combination of the two.
Monday, October 24, 2011
I have been out of the blogosphere for quite a while, so I hope readers will forgive a review of ancient history.
For a couple of years I have been active with a group in my home state of North Carolina that calls itself the Fourth Sector Cluster Initiative. It is comprised of social entrepreneurs from the business, government, and nonprofit sectors who intend to make North Carolina a nexus for the emerging Fourth Sector. My involvement has been largely confined to discussing legal impediments under state and federal law to the flowering of the Fourth Sector. If you look here, you can see a video of one of my typical rants against the Commerciality Doctrine.
Last June, the Cluster Initiative got face time with White House officials when President Obama and his Council on Jobs and Competitiveness came to Durham, NC. In a meeting with the Council, I had the privilege of explaining the work of Carolina Law's Community Development Law Clinic in a twenty-second burst. Interestingly, I was warned by event organizers not to refer to the Fourth Sector as the "Social Enterprise Sector." Why? Because that term sounds too much like "socialism" and therefore might be attacked by Republicans. I kid you not.
Later, I watched President Obama give a talk at Cree Industries in Durham. From that experience, I learned two things. First, our president is an extremely impressive extemporaneous speaker. Second, it's not worth it to attend a presidential speech because afterwards you have to wait for an hour in the parking lot until the big man heads for the airport.
Tuesday, May 24, 2011
It is with great sadness that I report Laura Brown Chisolm passed away this past Saturday after a long illness. As many readers of this blog know, Laura was a pioneering nonprofit law scholar, particularly with respect to advocacy by nonprofit organizations. She also served on the faculty of the Case Western Reserve University School of Law for over 25 years, including as a Professor since 1990 and also most recently as the Director of the new Center for Social Justice. She will be greatly missed by her many friends and colleagues, her students, and her family. She is survived by her husband, Guy "Mac" Chisolm, daughter Adrienne Chisolm Stephens, son-in-law James Stephens, and grand-daughter Natalie Stephens. In lieu of flowers, they ask that contributions be made in Laura's name to the Breast Cancer Vaccine Fund of Cleveland Clinic's Lerner Research Institute, the Nature Center at Shaker Lakes, Heifer International, or Groundworks Dance Theatre. A memorial service will be held this Thursday, May 26th, from 4:30 to 6:30 p.m., at the Cleveland Botanical Gardens, 11030 East Blvd., Cleveland, OH 44106.
UPDATE: Cleveland Plain Dealer Obituary
Tuesday, January 4, 2011
Stanford University's Center on Philanthropy and Civil Society is offering a one or two-year post-doctoral fellowship beginning on September 1, 2011. Possible research areas include philanthropy, social innovation, civic engagement and civic society. For more details, see the announcement.
Monday, November 15, 2010
In a Boston Globe article, based on a Chronicle of Higher Education review of 2008 Forms 990, more than one in five presidents at 448 colleges and universities received $600,000 in compensation, with thirty receiving more than $1 million in total compensation in 2008. Although a majority of the compensation packages were executed prior to the full effect of the economic downturn, academic executives' compensation is expected to rise in the coming years due to the supply and demand of top talent. Because of IRS changes to the Form 990 requiring compensation data to be reported on a calendar year rather than fiscal year basis, a true comparison to prior years is not achievable because of overlap in the reporting.
The results of the Chronicle's survey trigger differing opinions. On one hand, the president of the National Association of Independent Colleges and Universities argues that the compensation packages are warranted because of the increased demands placed on college presidents. On the other hand, the president of the National Center for Public Policy and Higher Education contends that increased chief executive compensation and tuition diminishes "public confidence in higher education."
According to the website of the Association of Fundraising Professionals, today, November 15, is the 25th annual National Philanthropy Day. Per the Association, today is a "special day set aside to recognize and pay tribute to the great contributions that philanthropy—and those people active in the philanthropic community—have made to our lives, our communities and our world." More than 125 communities and 50,000 people around the world are expected to participate in events and celebrations.
Thursday, July 29, 2010
Philanthropy News Digest today reported that the Borchard Foundation Center on Law and Aging is inviting applications for its 2010-2011 Academic Research Grant Program. According to the Digest, the program "is intended to further scholarship about new or improved public policies, laws, and/or programs that will enhance the quality of life for the elderly (including those who are poor or otherwise isolated by lack of education, language, culture, disability, or other barriers)."
The Digest continues:
The center expects grantees to meet the objectives of the grant program through individual or collaborative research projects that analyze and recommend changes in one or more important existing public policies, laws, and/or programs relating to the elderly; or anticipate the need for and recommend new public policies, laws, and/or programs for the elderly necessitated by changes in the number and demographics of the country's and the world's elderly populations, by advances in science and technology, by changes in the healthcare system, or by other developments. Each grant recipient is required to publish an article on the subject of their research in a first-rate journal.
[In the past,] scholars in the fields of health, law, medicine, and sociology have been awarded grants. The program is open to all interested and qualified legal, health sciences, social sciences, and gerontology scholars and professionals. Two or more individuals in the same institution or different institutions may submit a collaborative proposal. Grant recipients must be U.S. citizens or legal residents of the U.S. and must be affiliated with a U.S.-based institution or organization.
The grant program annually awards up to four one-year grants of $20,000 each.
Application materials are available at the Borchard Foundation Web site.