In the Black: A New Model for Change in Philanthropy

(This post is from Celeste E. Terry, assistant executive director and acting grants manager at the United Black Fund of Greater Cleveland, Inc. and guest contributor to our column, In the Black. See her other posts, here.)

Peter Buffett, son of investor Warren Buffett and chairman of NoVo Foundation, wrote a very thought-provoking article in the July 26, 2013 issue of The New York Times called, "The Charitable-Industrial Complex" that has stirred things up a bit in philanthropic circles.  Many people wrote rebuttals.  But, one in particular--written by Phil Buchanan, president of the Center for Effective Philanthropy--resonated with me.

Buffett wrote about "Philanthropic Colonialism," where people (like himself) with little knowledge of the true issue, the culture, or geography get the urge as a donor to "save the day."  These donors rarely think about the unintended consequences that may emerge from funding solutions that give rise to other issues.  He provided the example of "distributing condoms to stop the spread of AIDS in a brothel area ended up creating a higher price for unprotected sex."

Buffett is asking questions about how the nonprofit sector operates in a changed economy--a different environment--just as Dan Pallotta did in his Wall Street Journal article, "Why Can't We Sell Charity Like We Sell Perfume" (September 14, 2012).  Buffett stated, "There are plenty of statistics that tell us that inequality is continually rising."  Yet, according to the Urban Institute, the nonprofit sector has been steadily growing.  Between 2001 and 2011, the number of nonprofits increased 25 percent. Their growth rate now exceeds that of both the business and government sectors.  It's a massive business, with approximately $316 billion given away in 2012 in the United States alone and more than 9.4 million employed.  But, Buchanan countered, "while it's true that the numbers of nonprofits have grown rapidly (as have foundations), philanthropy today represents roughly 2 percent of GDP and has been stagnant at that level since roughly 1970."

As Buchanan stated, "the data suggests that the bulk of the giving goes to activities not primarily focused on leveling the playing field.  Yes, some of the dollars directed to religious and educational institutions - the two biggest pieces of the pie - might be directed to alleviate poverty or create upward mobility, but much is not."  Buchanan also presented the idea that perhaps the role of nonprofits should be to level the playing field as a way to encourage more social justice.  He wondered if he is part of the problem, suffering from a "crisis of imagination" too.

Buffett pointed out "as more and more business people enter the nonprofit sector from corporate downsizing or just needing a career change, business concepts have been introduced to make the nonprofits more accountable from the business mind perspective."  Further he said, "I now hear people ask, "what's the R.O.I. when it comes to alleviating human suffering as if return on investment were the only measure of success."Buffett calls for "humanism" not just capitalism to address issues.  And, in doing so wants to reverse what he called, "a crisis of imagination" in how we look at and measure nonprofit success.  This is exactly the point that Dan Pallotta made in his article. 

These three men--Buffett, Pallotta and Buchanan--are all saying essentially the same thing.  They all have the desire to create new models of philanthropy that help us think differnetly about how issues are identified, addressed, marketed and measured so that nonprofits are truly responsive to social justice needs:  more grassroots "human needs."

It is similar to the concept of Bitcoin, digital currency, that was in the news recently and which is creating a new model for commerce and currency today.  Bitcoin eliminates the need for banks and traditional currency to facilitate commerce between buyers and sellers.  Although not widely utilized, more and more businesses are becoming aware of Bitcoin and are starting to accept this new model for currency and commerce. Someone imagined that commerce and currency could be different than what has always been. 

Buffett, Buchanan and Pallotta all asked in different ways: "are we part of the solution or part of keeping the poverty machine of the Charitable-Industrial Complex alive and well?"

If your organization is grassroots, ask yourself, "is my organization really solving an issue or not? Or are we just seeking money year after year without knowing what the impact of the program is?"

Really, if nonprofits were successful at solving societal issues, most would go out of business, because there would no longer be a need for those organizations.  All communities would be thriving with minimal challenges to address. But, as long as we live in a capitalist system, there will be the "haves" and the "have nots".  Nonprofits are needed and must be there to help level the playing field.

As the economy continues to change, will you understand how to navigate the change so that your nonprofit is relevant and effective in solving problems? 

Please share your thoughts and comments.

Celeste E. Terry, MSSA

Comments

[Dorcus Johnson]

Dear Celeste,

Social entrepreneurism is truly the key to charitable giving. Working on people and their personal assets to help them be the best they can be to promote answers for themselves and others. Having someone just donate funds for programs will only patch the problems of self-development. Resiliency theory states we can help others find the treasures inside themselves or obtain new ones where they can decide where their talents/assets are placed and utilized for wealth promotion. Our Treu-Mart Fellowship has premise in this; I was doing this work before the fellowship, but now promote it more enthusiastically!! I don't take money from any entities that tell me what programs I can run, my talents and assets along with other colleagues' tell us where to place programming!! Buffet and others are waking up...thank God!! Let everyone find the jewels inside of themselves that they can mine from the Creator who knows what he has placed inside of us and why!! Good mining to everyone!!! Love ...Dorcus!!

[Celeste Terry]

Thank you Tina. Glad that the article provided you with a different perspective that you can apply to your work.

Keep reading! I enjoy the comments.

[Tina Milano]

Celeste, great article. Helps to understand things from the national perspective.
Tina Milano