Overhead has become a bad word for many public charities. Nonprofit watchdogs tend to give low ratings to organizations with high overhead. Many nonprofits have circumvented these ratings by disguising overhead in other parts of their budgets or by stinting on administrative spending that might actually help them achieve better results. Much recent research has found that some organizations may need to spend more on salaries and operations in order to improve their outcomes.
Charity Navigator—the nation’s largest nonprofit rating service—has revamped its rating criteria to focus less on how much money a program spends on overhead and more on what the program achieves with that money. In so doing, Charity Navigator is following in the footsteps of organizations like GiveWell, Philanthropedia, and GreatNonprofits.
Charity Navigator will still rate nonprofits with zero to four stars, but now it will offer additional evaluations of their effectiveness, accountability, and financial strength. “The core concept is to look at this as a social investment, like a stock with a certain level of risk,” executive director Ken Berger told Business Week. “So the rating we are looking to develop revolves around risk—what is the level of risk that you as a donor are willing to take on?”
Even though effectiveness is a holy grail for philanthropists, it can be notoriously difficult to measure. (GiveWell provides enormously detailed reports on 400 charities, and recommends only nine.) Charity Navigator is exploring ways to use collaborative media tools like wikis to collect information from a wide range of sources.
President Barack Obama’s Nobel Peace Prize came with a $1.4 million purse. As promised, Obama dedicated the prize money to charity. Noteworthy among the recipients was Fisher House, which received the largest single share ($250,000) of the Nobel money. Fisher House provides free housing for the families of U.S. servicemen and women who are undergoing medical treatment at nearby military and veterans’ hospitals. The first Fisher House was built in Bethesda, Maryland, in 1990 by Zachary and Elizabeth Fisher. Today, 43 Fisher Houses allow military families to be together while a loved one receives care. Since its inception, Fisher House has served more than 120,000 families, offering over 3 million days of lodging and saving military families more than $100 million in lodging costs.
The largest combined share of the purse ($625,000) went to scholarship funds: the Posse Foundation, the United Negro College Fund, the Hispanic Scholarship Fund, the American Indian College Fund, and the Appalachian Leadership and Education Foundation. Obama also passed $125,000 to College Summit, which works to improve college readiness and access. Obama donated the remainder, $400,000, to relief and development efforts in Haiti, sub-Saharan Africa, and Central Asia.
In his 2006 book, Who Really Cares?, Arthur Brooks found that the differences in charitable giving between secular and religious people are dramatic: religious people are 25 percentage points more likely than the secular to give money to charity (91 percent to 66 percent) and 23 points more likely to volunteer their time (67 percent to 44 percent).
One question among scholars of philanthropy is the extent to which this difference in giving stems from fundamental philosophical precepts. A Georgia-based organization contends that atheists are just as charitable as religious believers, and that the difference in giving is merely a matter of habit.
The Foundation Beyond Belief pools monthly donations from its members. Each quarter, it identifies secular charities in 10 categories like health care or environmental protection, and each member selects how much of his monthly donation will go to each charity. The next quarter, the organization identifies 10 new charities. In the first two months after the organization’s founding in January, 300 members contributed $10,000—about $33 per person.
The idea, says founder Dale McGowan, is to cultivate among secular humanists and atheists the habits of giving that are often second-nature to the religious. “You go into a congregational setting with your peers once a week and a plate is passed,” he told the Atlanta Journal-Constitution. “You are asked to donate to the church and other charitable causes. That encourages this regular habit of giving.”
McGowan disputes the observation that the non-religious are inherently less compassionate than believers. “I know people who are non-religious and that’s simply not the case,” he explained. “It’s just [that] it will never catch up with this community of giving, where it’s a habit.”
The Six Habits of Highly Effective Teachers
The number one in-school factor in a child’s education? Teachers. And it’s easy to see the results of a good teacher, or a poor one. But it wasn’t easy to see what set them apart—until now.
In the past 20 years, Teach For America’s (TFA) 25,000 young corps members have taught 3 million children in low-income urban and rural schools. Although TFA corps members generally get good results, TFA’s leaders found that a subset of its teachers is helping their students make a year-and-a-half’s worth of gains within a year. Steven Farr has identified what sets these superstars apart. Some of his findings, published in February in Teaching as Leadership, were counterintuitive. For example, prior experience in low-income neighborhoods had little bearing on teacher performance. (Farr’s work also validates a better-known fact: that a master’s in education has no effect on how well a teacher does.)
Instead, Farr found, TFA’s most effective corps members had six characteristics: they set big but measurable goals for their students, ensured that students and their families were invested in the goals, planned intensively to reach their goals, constantly monitored their students’ progress and adjusted course as needed, reflected critically on their own teaching, and remained relentless in their conviction of their own ability to overcome obstacles to their students’ learning.
More information on donor-led strategies to promote excellent teaching is available in Andrew Rotherham’s Achieving Teacher and Principal Excellence: A Guidebook for Donors, published by The Philanthropy Roundtable in 2008.
Parks and Re-allocation
In a December 2009 attempt to forestall a state budget crisis, the Arizona legislature raided half of the state parks system’s donations fund—including a $242,000 philanthropic bequest—for state expenditures.
When Asta Forrest died in 2001, she left the six-figure bequest to the state of Arizona for the general use of the parks system. Forrest, a Danish immigrant, moved to Arizona in 1990 and came to think of the state as her “Garden of Eden.” Her gift was the largest-ever to Arizona’s parks system. “She just loved everything about Arizona—its beauty and all the natural scenery,” Roger Essenburg, the executor of Forest’s estate, told the Arizona Republic. “She would never have given the money if she had known the state was going to take it away from the parks board.”
Essenburg noted with displeasure that the legislature was legally permitted to re-allocate Forrest’s gift. She had not designated any specific purposes for the bequest—trails, cabins, recreational facilities, and the like—but rather had given an “open-ended” gift that was ultimately open to a raid by the legislature. In some states, including Arizona, independent 501(c)(3) organizations collect donations to support parks and other state programs, avoiding the risk of raids by lawmakers.
Eminently Anonymous Donors
A husband and wife who gave $15 million anonymously to the University of Wisconsin–Madison to build a music performance building will remain anonymous—for now. A Wisconsin county circuit court judge ruled in February that the university cannot be forced to disclose their names, despite a lawsuit against the university.
In order to build the hall, UW is using eminent domain to condemn a popular off-campus hangout called Brothers Bar & Grill. The owners of the bar, brothers Marc and Eric Fortney, argued that since the university has no plans ready and is still seeking funding for the building project, eminent domain was inappropriate. They sued, and sought to question the donors. “I would think the public definitely should have a right to know,” the Fortneys’ lawyer told the Associated Press. “If somebody wants to give money anonymously, tell the university not to begin a public proceeding called condemnation.”
Instead, Judge Peter Anderson ruled that the value of releasing the donors’ identities is outweighed by “the harm that would result” to the donors themselves and to UW’s fundraising.
Andrew (“Sandy”) Wilcox, president of the charity that fundraises for the university, welcomed the ruling. Being forced to identify the donors “would not only damage this proposal but a lot of others in the future,” he explained. “We would be seen as not being able to keep our word.”
College Giving Craters
Private donations to American colleges and universities fell 11.9 percent in the 2008–09 school year—the largest drop ever recorded, according to a survey by the Council for Aid to Education. The school year that saw the financial crisis and ongoing recession has reversed the average annual 4.1 percent growth rate in higher ed giving over the past decade, Philanthropy Journal reported in February.
For example, Stanford University raised $640.11 million in 2009. Even though it raised more than any other school, it brought in 22 percent less than in the 2008 school year. Harvard’s fundraising is down 11.3 percent from 2008’s. Two-thirds of the institutions replying to the survey reported fundraising declines.
Not all giving was affected equally. Annual giving—which supports general operations—fell less than 1 percentage point, but capital giving fell 25 percent. Fewer alumni are giving less money, too: total alumni giving fell 18 percent, and the total percentage of alumni who contributed fell by 5.6 percent.