Tag Archives: Chronicle of Philanthropy

A Tale of Two Letters, and Two Sectors

[Note: A version of this post was published in the opinion pages of The Chronicle of Philanthropy on November 2, 2017.]

Here’s an idea: Let’s agree to stop referring to “the nonprofit sector.”

That’s because, in reality, there are two nonprofit sectors.

The first is comprised of the hundreds of thousands of charitable organizations that provide actual services. The second is made up of funders: foundations, donor-advised fund sponsors, and corporate and individual donors.

The priorities of these two nonprofit sectors are different. The first nonprofit sector – I’ll call them “the charities” for short – is focused on meeting mission: feeding, housing, educating, and counseling people; saving the earth and animals; curing diseases and healing the sick; producing community theater and running art classes; rescuing, feeding, and supporting families displaced from natural disaster; and generally doing what they can to keep this frayed and fragmented society of ours from falling to pieces.

The second nonprofit sector – “the funders” – genuinely cares about all of that. But the funders are also concerned with their own institutions’ and donors’ well-being, tax advantages, budgets, and privileges. And the interests of the funders are often in conflict with those of the charities. Continue reading

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Strange Math

[A version of this piece appeared in the Chronicle of Philanthropy on July 13, 2017.]

Here’s the world’s simplest math problem.

My wife Pat and I often meet a pair of friends for a movie. If there’s a risk that the show will sell out, I run over to the theater ahead of time and buy all four tickets in advance. When our friends arrive, we hand them their tickets and they pay us back what they owe us.

So the question is this: how many tickets did the movie theater sell?

Four, of course.

But in the parallel universe of donor-advised funds (DAFs), where double-counting comes as naturally as breathing and dissembling, the answer would be six.

Let me try to explain the inexplicable. Continue reading

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Tsunami

[Note: This post was published as an op-ed in the Chronicle of Philanthropy on October 28, 2014.]

Each fall the Chronicle of Philanthropy publishes its “Philanthropy 400,” a list of the nonprofit organizations that raised the most money in the previous year. Last week’s publication of the 2014 Philanthropy 400 created a stir by sadly confirming what many of us have feared for the last several years: an inexorable takeover of the charitable sector by Wall Street.

Three of the top 10 fundraising organizations on the list are donor-advised funds (DAFs) affiliated with financial firms: Fidelity (No. 2), Schwab (No. 4), and Vanguard (No.10). A fourth organization in the top 10, the Silicon Valley Community Foundation, is also primarily a sponsor of donor-advised funds. Money is flowing into advised funds, rather than to nonprofits that provide actual services. This accelerating trend of warehousing philanthropic dollars is a deeply troubling trend for American philanthropy. Continue reading

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Wall Street Muscles In

I really wish I’d been wrong in my earlier warnings about the growth of commercial donor-advised funds. But the latest Philanthropy 400 rankings from the Chronicle of Philanthropy indicate that the Wall Street acquisition of the nonprofit sector is, if anything, ahead of schedule.

It turns out that for the second year in a row, the second-largest “philanthropy” in terms of funds raised in the U.S. is an entity called Fidelity Charitable. Fidelity Charitable’s growth rate was an astonishing 89% over the year before, and with donations of $3.2 billion, it is positioned to overtake United Way Worldwide (that is, the combined United Ways of the entire country), which only grew 1% and raised $3.9 billion.

How is something named Fidelity considered a charity at all, let alone one that is poised to become the nation’s largest? Here’s a history lesson. Continue reading

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