Attention: You are now leaving the Wintrust website.
by Susan B. Garland
February 08, 2017
by Susan B. Garland
February 08, 2017
Want to be sure your charitable dollars are going to good use? For many donors these days, it's not enough that a charity has a worthy mission or keeps its overhead low. Before they hand over cash, these donors are giving nonprofits the same hard-nosed scrutiny that they give their investments.
Consider Jean Krasnow of Boston, who literally gets her hands dirty before she makes her donations. When Krasnow, 69, retired nearly ten years ago as a college administrator, she turned her attention to a new passion: urban landscaping and agriculture.
After volunteering for two programs, she began giving them money. One group provides landscape design for open spaces in low-income neighborhoods. The other is the Food Project, where teens work on local farms that distribute healthy food to Boston-area communities. "For retired people who are thinking of investing, try to be part of the work, so you understand the impact of the organization," Krasnow says.
In 2015, Krasnow took her hands-on approach in a new direction when she joined the Social Innovation Forum (www.socialinnovationforum.org) in Boston. The group acts as a business incubator for nonprofits -- helping small nonprofits improve performance and demonstrate to donors that their programs produce results. Krasnow and other volunteers spent at least 40 hours reviewing applications from more than a dozen food-insecurity groups that were seeking grants as well as counseling. She says her committee chose a handful "that were in a financial position to do better if they were helped."
Krasnow is among a growing number of donors -- both big and small -- who are part of a movement variously called impact philanthropy or effective altruism. These donors actively evaluate nonprofits' performance before they give -- sometimes by volunteering or conducting site visits to better understand the group's work. And many are part of collaborative groups, such as the Social Innovation Forum, that choose worthy local charities that are seeking both funding and help from donors on everything from marketing to leadership training. "If people can see that their philanthropic efforts can have an impact, they are motivated to give more," says Leslie Pine, co-managing partner of The Philanthropic Initiative, a Boston-based nonprofit that advises on strategic giving.
This results-oriented philanthropy often uses the language of the business world -- not surprising since many donors are retired executives. Donors seek evidence that their "investment" will pay off. Charities often must meet certain performance "metrics" -- say, how many youths got jobs as a result of a program.
Rather than making smaller donations to many charities, these givers often focus on one or two causes they truly value. And they're backing up the donations with involvement. "They don't just want to write a check -- they want to roll up their sleeves," says Ruben Orduña, vice-president of development and donor services with the San Francisco Foundation.
That organization is one of 750 community foundations, which make grants and provide guidance to local charities. They're an excellent starting point for potential donors to learn about the most pressing needs of their community. Typically, donors direct their charitable gifts from donor-advised funds that they set up at the community foundation.
Orduña says the foundation's donor-relations officers help philanthropists identify nonprofits that fit their interests, whether it be homelessness or education. The foundation sometimes takes donors on site visits, and it also conducts information sessions on specific social issues. Some donors take it a step further, using their funds to launch small charitable projects of their own, with guidance of the foundation.
Stephen Walrod, 67, a clinical psychologist who lives in Berkeley, Cal., became involved with the San Francisco Foundation after his younger son, Nate, died in 2002 at age 25 in a motorcycle accident. Walrod's wife had died from a heart infection when Nate was in high school, and Nate had used part of the insurance proceeds to open a donor-advised fund at the foundation to support youth-oriented projects. After Nate died, Walrod met with the foundation, and he says, "I was super-impressed with its vision."
Nate had taught in the Oakland public schools. Walrod says that he and Nate's friends "wanted to carry on some of the work Nate was doing to help local youth." They decided to hold a summer "peace camp" in Oakland for 6th to 12th graders. To raise money, Walrod helped create the Oakland Leaf Foundation.
Walrod has served on the nonprofit's board of directors since then. The group continues to run a four-week summer camp as well as other education and social enrichment programs. "Over the years, I meet regularly with people from the San Francisco Foundation to discuss projects they are pursuing that are similar to those of Oakland Leaf," he says.
Walrod also served as board chair of the Creative Growth Art Center, which has an art gallery and studios for artists with developmental, mental and physical disabilities. As a board member of both groups, Walrod has become an active fundraiser. "When you care about something, it is not difficult to ask people to have an impact," he says.
Giving circles pool money and time
If you're looking for a deep philanthropic experience, you can join one of the hundreds of "giving circles" nationwide. These circles are generally small -- sometimes friends or neighbors -- and members focus on a specific social need, investigate local charities and then pool contributions to make a greater impact. Participants often become involved with the nonprofits they fund.
Full Circle Fund, in San Francisco, is one of the largest giving circles. Unlike most, it has a staff, but the concept is the same as others. The 200 volunteer members choose among four circles, which focus on economic opportunity, education, the environment and energy, and health. Most members donate $5,000 a year.
At the start of the year, each circle is broken down into teams of six to ten members. The staff and team members decide on pressing community problems that they would like to address and then search for worthy local groups. Team members examine the nonprofits' financial wherewithal, potential for growth and likely ability to solve problems. At a "pitch" event, the nonprofits describe an initiative they would like funded with grant money, says Steve McCoy-Thompson, Full Circle's chief executive officer. Each year, 10 to 15 "grant partners" receive $15,000 to $20,000.
Over the next six or seven months, members use their expertise and contacts in the community to help the groups carry out their initiatives. For example, McCoy-Thompson says, if a nonprofit is struggling with marketing, a member may know someone who can provide materials at a discount.
Many circle members end up joining the boards of grant partners. Moreover, McCoy-Thompson says, the older members "serve as mentors to the younger members of the team or circle," helping "to build the next generation of engaged philanthropists."
Denise Mulle, 63, joined Full Circle Fund three years ago, soon after moving to California from Idaho, where she had owned a small business with her former husband. Mulle wanted to meet people who were engaged in charitable endeavors and, she says, "to have an impact on where the money goes."
Mulle joined the economic opportunity circle, working on a team focusing on nonprofits that help prisoners reenter society. They chose two groups for grants. The Last Mile trains prisoners at San Quentin State Prison to become computer programmers and create technology-related start-ups. And Defy Ventures, with the help of volunteer business executives, helps released prisoners become entrepreneurs.
Mulle says she regularly visits the Last Mile office to help with grant writing and to find contacts in the business world for internships. "It's amazing to be involved in something like this," Mulle says.
Collaborative ventures can make a difference
The goals of many volunteer-driven groups are to build the capability of nonprofits to grow, carry out their social missions successfully and efficiently, and attract additional funding from foundations and other grant-makers. Over 12 years, Social Innovation Forum, where Krasnow volunteers, has leveraged the donations and sweat equity of its volunteer members to raise $22 million in additional cash and in-kind services.
Social Innovation Forum's 30 "angel investors" -- that is, local donors who pony up $5,000 or $10,000 a year -- help choose about eight "social innovators" each year. Selected from hundreds of applications, each winner receives a $10,000 cash prize from the forum and access to other funders in the community. But more important, the nonprofits get two years of help from the forum staff and volunteers to improve their operations and achieve measurable results. "We call it venture philanthropy, and we have donors alongside us in all of our decisions," says Susan Musinsky, the executive director. "Everybody who comes to the process brings a different expertise."
One angel, Steven Segal, 55, became involved with the forum several years ago after deciding to shift gears -- to cut back his hours at the private equity firm he co-founded and to spend more time on philanthropy. His first assignment was as a "presentation adviser," working with a social innovator to develop a compelling pitch that would be delivered to potential funders. "This was a good fit for me because I've spent a lot of time going to investors who were looking for for-profits," says Segal.
Segal later joined several other volunteers to create a new Anything Goes social-issue track that would consider nonprofits that didn't fit into existing tracks at the forum, such as education and health. They winnowed 30 to 40 applications to about five for more scrutiny and interviews. They were looking for organizations, Segal says, "that are solving some significant social problem in a new and innovative way that can potentially have a national scale." Segal's group went on site visits, and it settled on two nonprofits to become 2015 social innovators.
During the vetting process, Segal says, the head of one of the nonprofits, the Courageous Parents Network, asked him to evaluate the group's strategic plan. Segal is now chair of the group's board of governors and is a committed donor.
The Web-based nonprofit helps parents who have a child with a life-threatening illness. In a series of videos, parents who have dealt with the loss of a child, as well as grief counselors and other experts, provide guidance on how to cope. One pitch to potential funders: "You can eliminate a social cost if you can avoid a marriage falling apart or a parent losing a job because they are so consumed," Segal says. "This is what sophisticated funders ask about today: 'It's very compassionate, but if I invest in an organization, I want a return on my dollar.'"
You may be able find a similar collaborative organization in your city through Social Venture Partners (www.socialventurepartners.org). Several of its 39 programs are overseas, but most are in cities in the U.S., including Austin, Charlotte, Cleveland and Seattle.
In Pittsburgh, Pa., the 40 "partners" each donate $4,000 a year to a grant-making pool for nonprofits that focus on at-risk youth. The donors select a couple of nonprofits after intensive review and then work with the nonprofits for 18 months.
One year when the group decided to focus on childhood obesity, partners were each given $50 and told to assume they were single parents buying food for three children in a low-income area of the city, says Elizabeth Visnic, director of the Pittsburgh SVP. There were only convenience stores to make their purchases, which were evaluated by a nutritionist. When the Pittsburgh nonprofits that sought to address this problem made their pitches for help, Visnic says, the partners were "more versed on the causes, impact and potential solutions to addressing this risk for children."
The partners also work with the nonprofits to develop business plans, Web sites and fund-raising capabilities. "People want to plug in their professional skills and life experience in a meaningful way," Visnic says.
If you don't have time to do the vetting yourself, review the list of charities that have received grants from your local community foundation, giving circles and philanthropy umbrella groups. You can also look at charity watchdog groups. Charity Navigator (www.charitynavigator.org) evaluates 8,000 charities, primarily on governance policies and financial performance, such as the money the charity spends on administrative expenses versus services.
A growing number of groups are trying to measure outcomes. One is GiveWell (www.givewell.org), which was created by donors in the hedge fund industry. Another is Philanthropedia (www.myphilanthropedia.org), which ranks 783 charities across 36 causes, such as at-risk youth, aging, climate change and education. (Philanthropedia is a division of GuideStar, which provides information on nonprofits at www.guidestar.org).
Philanthropedia bases its rankings on evaluations by foundation professionals, academics and other experts who are familiar with a particular cause. You can read the reviews of each charity on the Web site. "We want you to use your heart to figure out your cause area, and then use your head to choose a nonprofit to give to," says Gabe Cohen, outreach manager for GuideStar.
Copyright 2015 The Kiplinger Washington Editors
This article was written by Susan B. Garland, editor and Kiplinger's Retirement Report from Kiplinger and was legally licensed through the NewsCred publisher network.