On Private Giving to Public Schools

September 5th, 2013 § 1

Glamorous and lucrative school auctions to support wealthy suburban schools have become a stock feature of popular writing about Silicon Valley. David Kaplan opened his 1999 book, The Silicon Boys, with an account of the over-the-top excesses of the annual charity auction of the Woodside School Foundation.  And George Packer’s recent article in the New Yorker updated the scene:

The Woodside School Foundation now brings in about two million dollars a year for a school with fewer than five hundred children, and every spring it hosts a gala with a live auction. I attended it two years ago, when the theme was RockStar, and one of Google’s first employees sat at my table after performing in a pickup band called Parental Indiscretion. School benefactors, dressed up as Tina Turner or Jimmy Page, and consuming Jump’n Jack Flash hanger steaks, bid thirteen thousand dollars for Pimp My Hog! (“Ride through town in your very own customized 1996 Harley Davidson XLH1200C Sportster”) and twenty thousand for a tour of the Japanese gardens on the estate of Larry Ellison, the founder of Oracle and the country’s highest-paid chief executive. The climax arrived when a Mad Men Supper Club dinner for sixteen guests—which promised to transport couples back to a time when local residents lived in two-thousand-square-foot houses—sold for forty-three thousand dollars.

Were Woodside an anomaly, it would be easier to ignore the phenomenal amount of private giving to public schools. In an op-ed in the New York Times, Not Very Giving, I chose the Hillsborough Schools Foundation as an example of the trend. (Its 2012 Live Auction Catalogue is really quite something.) And it would be easy to point to similarly outsized fundraising efforts by local school foundations in Menlo Park, Palo Alto, Orinda, and Los Altos. The same is true elsewhere in the country: in pockets of New York City, in Montgomery County outside Washington D.C., and so on.

Kaplan and Packer see the fundraising galas thrown by school foundations as an opportunity to shine a light on the excesses of our current tech titans. In the current overheated Silicon Valley economy, in an age of growing inequality, school auctions only scratch the surface of such opportunities.

But the problem with school foundations goes much deeper than exposing the follies of fundraising galas among the one percent. The problem is that such activity actually exacerbates inequalities in funding between public schools, widening the already large gap between rich and poor.  And it is carried on under the name of, and legal recognition as, charitable activity.

Here is a case where charity does not aid the poor, is not indifferent to the poor, but actually confers additional advantage to the already well-off.  For those who understand charity to mean something about alms-giving and support for the poor, it is surprising how little of the roughly $300 billion given away annually in the United States is directed to the needy. (A few links on this: report from the Center on Philanthropy at Indiana University, Wonkblog post, a 2007 Wall Street Journal op-ed by Sheryl Sandberg, and a new, but gated, article I wrote on the topic here.)

In the case of school foundations, I don’t blame well-intended parents.  They are seeking quite naturally to support the education of their own children. Punishing parents by banning or curtailing their support for their children is no answer, but neither is publicly subsidizing behavior that encourages activity which predictably worsens inequalities between the educational opportunities of rich and poor kids.

The problem here is policy, not parents. So the focus should be on public policy, on the basic framework that defines, structures, and governs philanthropy. This is the topic of much of my recent research. What role should philanthropy play in a democratic society? What norms should inform the policies that govern the philanthropic sector?

Such questions are also core to the work of the scholars and practitioners at the Stanford Center on Philanthropy and Civil Society and in our magazine, the Stanford Social Innovation Review.  In 2005 I wrote there about the perverse incentives in tax policy that structure charitable giving, A Failure of Philanthropy: American Charity Shortchanges the Poor, and Public Policy is Partly to Blame.  The piece has some data about the extent of private giving to public schools in California and discusses a range of public policy problems and solutions.  Earlier this year, I contributed to a forum in the Boston Review on the topic What Are Foundations For? And I am completing a book, entitled Just Giving, that seeks to provide a full treatment of the role of philanthropy in democracy.

 

 

 

What are Foundations For?

March 27th, 2013 § 0

I’ve been writing about the role of philanthropy in democracy for the past few years. Through my work with the Stanford Center on Philanthropy and Civil Society, I’ve come to understand a little better the work of one significant component of American philanthropy: private philanthropic foundations.

Foundations are institutional oddities in democratic societies.  They are largely unaccountable, non-transparent, permitted to exist in perpetuity, and the beneficiaries of significant tax breaks.  Why create such an institutional form in democracy? What are foundations for?

That’s the question I explore in a new forum in the current Boston Review.  There are interesting responses from Stanley Katz, Diane Ravitch, Christopher J. Coyne, Deborah Fung, Paul Brest, Rick Cohen, Scott Nielsen, Tyler Cowen, Seana Shiffrin, Pablo Eisenberg, Larry Kramer, Eric Beerbohm, Robert K. Ross, Gara LaMarche, and Emma Saunders-Hastings.

Lead paragraph of the article below the fold.

» Read the rest of this entry «

Post-Doctoral Fellowships at Stanford PACS

November 14th, 2012 § 1

The Stanford Center on Philanthropy and Civil Society will once more appoint two post-doctoral fellows for a 1 or 2 year fellowship.

Full description of the fellowship is below, and information about how to apply is here.

Postdoctoral Fellowship

Stanford Center on Philanthropy and Civil Society

Application deadline: January 9th, 2013

Stanford PACS invites applications for a one or two-year postdoctoral fellowship. The Center will award fellowships for two scholars to spend time at Stanford University and participate in Center activities. We seek to appoint promising post-doctoral scholars who are actively engaged in research on topics related to our core scholarly mission, which is to develop and share knowledge to improve philanthropy, strengthen civil society, and effect social change. It is a broad mandate, encompassing scholars from across the university. Potential applicants can get a sense of the wide range of scholarly projects under the PACS umbrella by consulting the research projects of current and past PhD and postdoctoral fellows at the Center.  Topics range from the ethics of humanitarian aid, debates over school financing and form, assessments of the efficacy of foundation efforts at field-building, organizational capacity for continuous innovation, studies of altruism, and the role of social movements in civic engagement, to name only a few topics.

Each fellow will be affiliated with a disciplinary department or school at Stanford University and with the Center on Philanthropy and Civil Society.  The postdoctoral fellowship provides young scholars with the opportunity to pursue original research related to philanthropy, social innovation, civic engagement and civil society and to work closely with a Stanford faculty member, while participating in program activities such as our research workshop on philanthropy and civil society and monthly public events.  The fellowship provides ample time for the fellows to pursue their current line of scholarship and also expects collaboration with Stanford scholars.

Stanford University faculty members who are potential sponsors of a postdoctoral fellow include the Center on Philanthropy and Civil Society Faculty Co-Directors Paul Brest, Woody Powell, and Rob Reich.  A longer list of potential faculty is available on the PACS website under the link for the faculty steering committee.

The Center on Philanthropy and Civil Society is a program of the Institute for Research in the Social Sciences (IRiSS).  Since 2006, the Center has supported PhD students and undergraduates from across the university, and since 2010 the post-doctoral fellowship program reflects our effort to fund research from outside Stanford.

The annual fellowship stipend is $50,000, plus the standard benefits that postdoctoral fellows at Stanford University receive. The fellowship program falls under U.S. Immigration J-1 Exchange Visitor Visa activities.  Stanford University stipulates that postdoctoral fellows must have received their PhD within the past four years.

Please include the following information in both electronic and paper format:

  1. Cover letter detailing the reasons for the applicant’s interest in coming to Stanford, including comment on the faculty member or members with whom the applicant wishes to work.
  2. Curriculum Vitae.
  3. Fellowship proposal detailing the research that the fellow would undertake while at Stanford (five page limit).
  4. Writing sample consisting of either a dissertation chapter or a recent published paper.
  5. Graduate Transcript with proof that applicants have completed all the requirements for the PhD, or a letter from their PhD advisor stating they will do so by June 2013.
  6. Two Letters of Recommendation
  7. Please disclose if you have additional funding arrangements.

The deadline for submission is January 9th, 2013.

Applications should be submitted electronically to the Stanford University Center on Philanthropy and Civil Society via email to pacscenter@stanford.edu and may also be submitted by hard copy if necessary directly to the Stanford University Center on Philanthropy and Civil Society, PO Box 20554, Stanford, CA 94309-8554.

Questions about the application should be directed to pacscenter@stanford.edu.

 

Wendy Kopp and Teach for America event

January 11th, 2011 § 0

Wendy Kopp, the founder and CEO of Teach For America, will be visiting campus tomorrow, Wednesday, Jan. 11.   She’ll be delivering a lecture as part of the BASES program on social entrepreneurship.  And she’s doing an event, in conversation with me, at 3pm, co-sponsored by the Program on Ethics in Society and the Center on Philanthropy and Civil Society.  See below for the flyer.

Post-Doctoral Fellowship at the PACS Center, 2011-2012

December 9th, 2010 § 0

The Center on Philanthropy and Civil Society is a relatively new outfit here at Stanford.  Its mission is to cultivate research from any corner of the university on issues related to philanthropy, nonprofits and nongovernmental orgs, or civil society/associational life.  We understand the subject matter quite broadly.

For the past four years we have been funding dissertation fellows, and potential post-doc applicants can get a sense of the wide array of research projects/topics that would fall comfortably under our mission by reading over the research topics of our previous and current dissertation fellows.

» Read the rest of this entry «

Early Thoughts About Jumo

December 1st, 2010 § 8

Jumo is a new and much heralded social networking site for stimulating, coordinating, and occasionally funding social change.  It was created by someone with a sterling track record in social media innovation.  Chris Hughes was a co-founder of Facebook, departing the booming company to join the Obama campaign as official social networking impresario.  When Jumo was announced earlier in 2010, many cheered the entry of the Facebook and social media veteran, hoping it would improve upon Facebook’s Causes as a means of using social media for the public good.

Jumo’s beta site went live yesterday, accompanied by puff pieces in the New York Times, Huffington Post, and Mashable.  Sample line: “If everything goes according to Chris Hughes’ plan, Nov. 30, 2010 will be remembered as a critical and celebrated moment for the multi-billion dollar nonprofit and charitable industry.”  Typical techno-boosterism.

It was a rough opening day.  The site was evidently inundated with eager early adopters, frozen by web traffic and consequently unusable for the majority of the day.  Jumo took the site down entirely today to work on performance.  That’s a good sign, of course.  Tons of user interest.

I was able to play around with Jumo in its earliest hours of availability, registering and creating a few projects that other users could then follow.  Here are some early impressions.

The Nuts and Bolts

Users can connect to or follow three different categories of things: people, projects, and issues.  So if I follow a person, say Chris Hughes, I’ll learn about the things he cares about.  (He’s big on Partners in Health; I am too.).  I can also follow projects, which are particular organizations.  Jumo has pre-populated the site with several thousand organizations, each of which has its own page listing followers and pulling in information about the organization from the web, especially from Facebook, Twitter, Flickr, and YouTube.  It’s also possible to follow an “issue”, which is a general policy area under which all projects are classified.

When registering for the site, users are asked to follow at least one issue, such as education or poverty or health. Users can create new projects – adding new organizations to Jumo – but they cannot, as yet, create or define new issues.  Jumo is a completely open platform, meaning that site will allow anyone to create a project, no matter who the person is, no matter how small or how large the project, no matter whether the organization is for profit or nonprofit.  Jumo claims that each project should have a social mission, but social mission is defined by the user.  Public charities are not the only groups with social missions. For profits have social missions, too.  And of course state agencies and institutions have social missions. So Jumo will permit a local bowling league or the Red Nose Institute to exist alongside the Bill and Melinda Gates Foundation alongside WalMart alongside the United States of America.  All are individual projects in Jumo’s lexicon.

There are two important limits to this “accept all projects” approach.  First, because Jumo is itself a registered 501(c)(3) public charity, it cannot list organizations that engage in electioneering or direct political campaigning.  That would violate tax rules that govern nonprofits.

Second, Jumo will permit users to make charitable donations only to formally registered 501(c)(3) organizations.  This is monitored by inputting the official IRS employer identification number, or EIN, of the nonprofit.  I would guess that Jumo interacts with Guidestar to verify the existence and identity of each nonprofit.  Without the EIN, no donation functionality.  More about Jumo’s donation button later.

Registering for Jumo works through Facebook Connect.  So you need a Facebook account to use the full functionality of Jumo.

The Good

Overall, Jumo’s site is well designed.  As expected, the site’s user interface borrows liberally from Facebook and is easy on the eyes and simple to navigate.  It’s easy to call up people, project, and issue pages.  Newly created projects have content imported through Facebook and other backend web searches.  The search bar anticipates what you’re looking for and offers an instantaneous list of organizations that match your entry.  The site is very easy to use.

The Bad

While the site has a terrific user interface and visually appealing design, I worry about some of the decisions the Jumo team made about how Jumo would function.

Start with the decision to use Facebook Connect as the only gateway to full Jumo functionality.  This is a two-edged sword, for while it facilitates all kinds of content and allows Jumo users to build upon their Facebook friends it also delivers all kinds of further information to Facebook, consolidating its control of social networking.  More worrisome, it means that people without Facebook accounts – think grandparents who actually do make lots of donations and are among the most civically engaged of all people – will not be able to use Jumo.

But the Facebook Connect concern is trivial.  Two other Jumo decisions caught my attention, and just as Jumo invites users to “flag a project for review”, I hereby flag these issues for Jumo’s review.

1.  Fees on Donations.  Jumo follows the DonorsChoose and GlobalGiving model: a fee is attached by default to all donations made through site to other projects.  Jumo levies two fees, one mandatory and the other optional.  The mandatory fee is 4.75% of the total donation, which Network for Good captures for its backend credit card processing of the donation.  Jumo (like DonorsChoose) then adds a whopping 15% fee on top of this, making the total cut in fees nearly 20%.  Users can opt-out of the Jumo 15% fee, and select a 25% fee or no fee at all, but to do so is cumbersome and non-obvious.  This is a classic nudge at work.

Worse, Jumo’s site misleadingly describes the transaction fees as an “optional tip”. This is Orwellian.  The language of a tip gives users the impression that they would be adding 15% to the amount they have decided to donate to a nonprofit.  That’s not what is happening on the site; the 15% Jumo fee comes off the total donation.

[***UPDATE, 12/2: Jumo has changed the language on their FAQ page, dispensing with "tip" and accurately describing what's happening as an "optional donation".  Good to see them responsive on this issue***]

Expecting Jumo users to fork over 20% of donations doesn’t seem to me a good decision.  Not to be transparent about it – calling it a tip – is simply wrong.  (DonorsChoose, by contrast, calls their fee an “optional donation” and makes transparent that the fee is included in the amount of the donation, not something added on top of it.)

Suggestion to Jumo: provide an obvious option on each project page to call up the mailing address of each nonprofit organization where users can send a donation through the mail, avoiding the 20% fee and directing the full amount of the donation to the nonprofit they mean to support in the first place.

2.  At present, the categorization scheme for identifying projects is threadbare and inflexible.  It’s the only part of the site that is not an open platform.  Users are stuck with the few categories offered up by Jumo.  This is something the Jumo team will work on, I’m sure, but the problem is big.  Let’s say I want to create a page for a nonprofit I’m connected to, Stanford University.  I can easily do that by “adding a project” on Jumo, but then the site asks me to identify what kinds of issues Stanford is working on.  There’s no button for “everything”.  I thought that perhaps “education” was the appropriate issue to select, but that choice called up a series of other narrower options such as “teaching training” or “education reform”, none of which included “higher education”.  No option at the launch to have a project on higher education?

Equally strange is the decision not to include an issue called “religion” or “spirituality”.  Nearly half of all money donated in the United States is given to religious groups.  Religious groups – congregations, synagogues, mosques as well as faith-based social service agencies like the Salvation Army – will surely want to set up project pages to connect their donors and members.

Jumo needs to let users define issue areas as well as projects.  They might take a few cues from the National Taxonomy of Exempt Entities, an imperfect categorization scheme, to be sure, but a massive improvement upon Jumo’s current offering.

One other question: if Jumo is a nonprofit, why is the site a dot.com and not a dot.org?

The Ugly

The open platform is the large bet placed by Jumo. The best aspect of the site is its wide-ranging flexibility: anyone can join and connect with organizations and issues they care about.  The worst aspect of the site is its wide ranging flexibility: anyone can join and create projects for any organization.  It appears that each project can have only one administrator, where the administrator functionality is to be rolled out over the next few months.

The upshot is that Jumo should get ready for a landgrab.  It is built into the open platform functionality, for anyone can set up a project page for any organization and become the sole administrator.  Jumo does no vetting save a check on the EIN for 501(c)(3) public charities.

Jumo vets neither organizations nor administrators.  So literally within days the site will be populated with far more organizations than the several thousand that Jumo staffers created before the launch.  (If I had to guess, this is exactly what happened on launch day that caused the site to crash.)  With more than one million nonprofits, does Jumo appears committed to housing them all, treating them all equally as projects.

But consider a few problems with this open platform approach.  First, my own employer, Stanford University, has so many centers and programs and departments and schools and initiatives within it that I would not be surprised to find several hundred projects under the Stanford University umbrella.  All of these will have the same EIN, but they will work on different issues, in different areas, and have different members and followers.

And remember, Jumo allows users to create project pages for garden variety associations (say, a dorm at Stanford, a book club in Peoria, a park in Montana), for for-profit companies, international organizations, and even for countries and state agencies.  Jumo will happily host nearly everyone and everything that can lay claim to a social mission.

But the value proposition of Jumo is that it will help people learn about, connect to, and evaluate organizations and issues they care about.  The threat of an open platform is that users will find no way to separate serious from ephemeral organizations, well-functioning from ill-functioning organizations.

Moreover, since anyone can create a project, the threat of cybersquatting and misrepresentation looms large.   To test out the site, I set up a page for Stanford University.  Took 10 minutes.  I also set up a page for Harvard University.  I was named administrator for the Harvard project page 5 minutes after setting it up.  Bizarre.  I set up a project called “The United States of America” (vision: life, liberty, and the pursuit of happiness; mission: government of the people, by the people, and for the people).  I am currently the admin there too.  Chris Hughes can’t be happy about that.

How will users be able to trust the information Jumo delivers to them about the projects they connect to?  This is a problem with any open platform, to be sure.  Facebook and Twitter face it as well.  (Twitter handles it with a visual tag for so-called “verified” accounts.)  Jumo will need to go down this path.

At the moment, the landgrab concern seems most pressing.  Get yourself over to the site and claim a page for your favorite, or least favorite, nonprofit organization, for-profit company, or country.  Cybersquatting has a long history.

Presumably Jumo will deal with this issue by banning cybersquatters and deleting their accounts.  But with fewer than ten employees currently, and potentially millions of users and millions of projects to assess, is Jumo prepared to evaluate who is squatting and who isn’t?

In short, if Jumo wants to help people find and evaluate charities, it has to make that navigation easy and it has to provide reliable information about the projects that populate its site.  With tens, perhaps hundreds, of thousands of organizations about to be created on the site, run by administrators who are unvetted, Jumo may contribute to the problem of evaluating charities rather than fixing it.

So the real worry is that the value proposition of Jumo will be negative.  The site threatens not to help users connect but to present users with a bewildering array of flotsam and jetsam.  Fog rather than clarity. A bunch of noise.

How Jumo handles this will determine, it seems to me, whether Jumo succeeds in the long run or not.

PACS + SSIR = exciting news

October 7th, 2010 § 2

The Stanford University Center on Philanthropy and Civil Society (PACS) announced on Tuesday its acquisition of the award-winning Stanford Social Innovation Review (SSIR).  I serve as faculty co-director of PACS, a center that has seen huge growth since its founding several years ago.  Bringing SSIR into our fold will bring us a much wider reach.

Full press release beneath the fold.

» Read the rest of this entry «

Foundations & the Public Good

March 1st, 2010 § 0

The PACS Center will host on Thursday, March 4 an interesting event:

Philanthropy in the 21st Century: How Foundations Can Advance the Public Good.
5:00 – 6:30pm
Stanford Humanities Center
Levinthal Hall

Sterling Speirn, the President and CEO of the W.K. Kellogg Foundation (yes, the folks who make your breakfast cereal), will deliver the main remarks. I and several PACS Center Dissertation Fellows (Amanda Greene and Natalie Privett) will serve as discussants.

Sterling was the director of the Peninsula Community Foundation before heading off to lead Kellogg. Kellogg has played a large role in stimulating some interesting new initiatives. I’m particularly impressed by their Food & Community grantmaking, which was doing great stuff far before Michael Pollan came along.

The event is open to the public. You can rsvp here, or by emailing Shana Sachs.

More on Anything Goes, reply to Stan Katz

December 10th, 2009 § 0

Stephanie Strom’s article from Sunday, “Charities Rise, Costing US Billions in Tax Breaks“, which cited some research I conducted with a couple of Stanford students this summer, has elicited some interesting commentary on the web.

Princeton’s Stan Katz, a long-standing commentator on philanthropy and the nonprofit sector, posted a reply on the Brainstorm blog of the Chronicle of Higher Education, titling the post “Must Charity Be Efficient?

Stan’s take is that charities need not be efficient. They simply are expressions of an American sense of individual philanthropy. I posted a reply on the Brainstorm blog, which I re-post here.

Thanks to Stan for posting something about the article. I’d re-write the post title to ask if Stan think that charities should be held to any standard whatsoever. That’s the fundamental question, I think.

Over the past few years, I’ve explored in writing a variety of possible standards for assessing the justification of tax incentives for nonprofit orgs and their donors. One option is to fix on a redistributive standard: nonprofit orgs are worthy of tax-incentivized giving if they demonstrably provide for basic needs of citizens.

In the recent report Stan describes above, Anything Goes, my students and I tried to show how little attention is paid to anything about the worthiness of a 501c3 application. Forget about redistribution. As Stan writes, we have a totally inefficient sector with tens of thousands of new 501c3s created every year, duplication of efforts, ineffective service, etc.

Stan appears to reject distributive and efficiency concerns out of hand.

So I assume he thinks the only standard is a non-distribution constraint: no profits to shareholders. He has to insist on this, for without it, we have no way of marking the difference between a for-profit and a non-profit.

But is this all we really want from the nonprofit sector? And do we want uniform incentives for every kind of organization under the 501c3 umbrella? Identical tax benefits for donors to the Red Nose Institute and to the Salvation Army? If Stan wants to go there, then I’d love to read an argument in favor of it that goes beyond what he wrote above.

New Research on 501c3s: Anything Goes: Approval of Nonprofit Status by the IRS

December 5th, 2009 § 4

The IRS approved more than 50,000 new organizations as 501c3 nonprofits in 2008. It has approved more than 50,000 organizations for every year of the past decade, leading to a massive growth in the nonprofit sector. The number of 501c3s has grown by more than 50% in just a decade. What kinds of organizations are most often approved? How strict or lax is the approval process?

Stanford’s Center on Philanthropy and Civil Society (PACS) released a new report that examines the approval of nonprofit status by the IRS. The report is based on research I conducted over the summer with two terrific students, Lacey Dorn and Stefanie Sutton.

We found that the approval rate in 2008 was above 98%. And we found that some of the organizations that had been approved are truly bizarre.

The report is entirely descriptive, but the findings raise some important questions, I think, about the nonprofit sector in the United States:

1. Do we need 50,000 new 501c3s every year? Do we have too many nonprofits?
2. Need an organization demonstrate anything beyond the so-called “non-distribution constraint” — no profits to shareholders — in order to obtain nonprofit status? Does the charitable sector not have any substantive content to it beyond not-for-profit?
3. Have Americans conflated the undeniable importance of freedom of association with an entitlement to tax benefits?
4. Is the IRS the best agency to issue determinations of nonprofit status?

The report can be downloaded from the PACS Center website. It can also be downloaded by clicking here:

Anything Goes PACS 11-09.pdf

For an interesting take on an alternative model, check out PACS’ visiting scholar Lucy Bernholz’s recent post on her terrific blog.

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