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Home > Research Articles > Woes magnify charity's promise

The Philanthropy Journal

Friday, July 26, 2002

Woes magnify charity's promise. Facing financial hurdles, nonprofits and donors can change philanthropy. By Todd Cohen

It is the worst and best of times for philanthropy, an ideal time for change.

The economy is reeling, markets are tanking and America's corporations, and their workers and shareholders, are easy prey for money-grubbing thugs with pals in high government places.

That axis of financial despair has pinned charities against the wall. Endowments are plunging, government support is shrinking, demand for services is growing and scandals at institutions from Enron to the Catholic Church give pause to donors everywhere.

What's more, we are in for an orgy of hand-wringing, flag-waving and media-yapping as the Sept. 11 anniversary nears, thickening the fog that already obscures the work of charities as they struggle to deliver services and raise money.

The good news is that the doom and gloom could spur charities and philanthropy alike to strengthen and reshape the respective roles they play in our communities.

Faced with a stumbling economy, government retreat and closer scrutiny of their operations, charities can get back to basics, using common sense to hone their mission, streamline their operations and find new partners and new ways of doing business.

Far too many nonprofits are stuck in the rut of business as usual, overworked, underpaid and overseen by well-meaning but clueless boards.

Nonprofits and their boards need to kick-start themselves to justify the tax-exempt status they enjoy. Their managers need to be more productive and innovative, and their boards need to pitch in more, helping to raise money and make sure their organizations thrive.

The spreading gloom and doom also offer a big chance for donors and funders to turn on its head the odd phenomenon of great philanthropy flowing from the gutter of abuse and excess.

Corporate titans like Carnegie, Ford and Rockefeller generated enormous wealth by crushing their competitors, workers and customers, and then endowing foundations to tackle huge social and global ills.

Their entrepreneurial heir, Bill Gates, has amassed billions of dollars out-muscling his competitors, and then created the world's largest philanthropy and launched a noble quest to improve world health.

Those entrepreneurs' collective tale constitutes an American parable of corporate bullies who crack a lot of eggs and then morph into kinder and gentler souls whipping up philanthropic omelets to feed the world.

What's more, while many corporate moguls begin their careers as working stiffs, they ultimately take on the role of philanthropic sages -- a role also embraced by those running and overseeing the foundations the moguls create.

The result is a rigid caste system in the charitable world.

Those who build or control foundations form the class of philanthropic priests, dispensing dollars, wisdom and social agendas.

Scrambling for the shiny dimes tossed to them by the spiritual descendents of John D. Rockefeller is the class of nonprofit supplicants.

These caste distinctions are rooted in -- and as outdated as -- the model of philanthropy that grew out of the industrial age and still dominates the charitable world.

Today's global information economy, however, while fiercely and increasingly competitive for nonprofits, is fertile ground for a new kind of philanthropy that is emerging.

You no longer need to be a Rockefeller to be a philanthropist, or need a Rockefeller to be your philanthropist.

While institutional wealth can fill a critical need, the role of philanthropy ultimately is not to control wealth and knowledge but to expand and share those resources.

Using strategies and tools such as social enterprise, venture philanthropy, planned giving and technology, today's donors, funders and nonprofits can work together to create an open and self-sustaining social marketplace, one that values, connects and builds on the diverse individuals, organizations and resources in the communities that philanthropy exists to serve.