Philanthropy: Rethinking How to Give

Image by Getty Images via Daylife

A growing movement to review and rate charities on their real world results may give donors a better idea where they can do the most good

By Amy Feldman

When disaster strikes, as it has in Haiti, Americans dig into their pockets and give. While such generosity is unquestionably a good thing in a terrible time, few individuals do much research on the groups they've chosen to receive their money. The uncomfortable truth in philanthropy is that it's not easy to know whether the group you're giving to is particularly effective at what it does. With Americans giving more than $200 billion a year, that's a lot of ambiguity.

A growing movement to review and rate charities on their real world results could give individuals a far better idea of where their donations can do the most good. Moreover, it could guide nonprofits to focus on the programs that have the most impact and to jettison those that aren't working as well.

Image by Case_Foundation via Flickr

Charity Navigator, the largest nonprofit rater, is overhauling its rating system to look beyond financial measures and gauge effectiveness. Other online evaluative efforts include GiveWell, Philanthropedia, and GreatNonprofits. Their approaches vary, from crowdsourcing to research reports. In addition, GuideStar, which serves as a clearinghouse of information on nonprofits, has begun including some of these rating reports on its site. Two other initiatives, from Root Cause and Partners for Change Initiative, are working to get more and better rating information to financial advisers so they can help clients make giving decisions.

Not all the efforts are new, but they're starting to reach critical mass. "There is a mindset shift going on in philanthropy," says Sean Stannard-Stockton, chief executive of Tactical Philanthropy Advisors, a Burlingame (Calif.)-based advisory firm to high-net-worth donors. "People want to know that their money is actually making a difference." That's especially true in the current economic downturn: Donors have fewer funds to give, while charities need more cash to provide services to more people in need.

It may be smarter for donors to think about their giving as they would their investment portfolios. That means addressing the big questions first (what matters most to you?), then drilling down to the groups that have the most impact. "We as Americans like to do things immediately," says GuideStar President Robert Ottenhoff. But a more thoughtful way to give away money is to have a longer-term plan.

Image via Wikipedia

Figuring out a charity's effectiveness is not simple. A homeless shelter, international relief organization, or other philanthropy is not a business, and their social impact needs to be evaluated on different criteria than profit and loss. The true benefit of their programs may not be clear for years. "Social-impact assessment is the Holy Grail of people doing philanthropy and nonprofit work," says Laura Callanan, a philanthropy expert at McKinsey. "How do you know what works and why? And how do you know that money is making a difference in people's lives?"

If average Americans look to one place for advice on giving, it's Mahwah (N.J.)-based Charity Navigator. It gives ratings—going from zero to four stars—to nearly 5,500 charities, and its site gets some 4 million page views annually. Those ratings have focused largely on financial yardsticks. For instance, it has given charities high marks for low overhead, but research now shows that metric is not as helpful as others in evaluating a nonprofit's work.

So Charity Navigator—under the direction of Ken Berger, its executive director since June 2008—is devising a system that will still go from zero to four stars but will include measures of financial strength, accountability, and effectiveness. Berger says he is planning to roll out those ratings in the spring of 2011, with additional information appearing between now and then. "The core concept is to look at this as a social investment, like a stock with a certain level of risk," he says. "So the rating we are looking to develop revolves around risk—what is the level of risk that you as a donor are willing to take on?" A small startup charity, for example, may have a more innovative but less proven—and thus riskier—approach to a problem than a larger, more staid organization.

To measure effectiveness, Berger says Charity Navigator's advisory panel is considering the use of crowdsourcing—gathering data through some type of Wiki format. Another possibility: David Hunter, a philanthropic consultant, has created a social-assessment tool that uses 26 questions to get at issues of how a charity gathers data on its initiatives and whether it is using that data strategically—for example, to better its programs. "I believe it not only provides a reasonable statement of the level of risk that a social investor takes, but it also should provide an organization with a diagnosis to improve its work," he says.

Charity Navigator's competitors have come up with alternative methods. Brooklyn-based GiveWell, launched in 2007, offers rigorous Wall Street-like research on nearly 400 charities. Its analysts plow through data and write lengthy, footnoted reports about each one. Few nonprofits have enough data or analysis to demonstrate their successes, and GiveWell recommends only those that can meet that high bar. "The charity needs to do a lot of analysis on its own," says GiveWell co-founder Holden Karnofsky. The upshot: GiveWell recommends just nine charities. Among them are Village Reach, which aims to improve the logistics of distributing medical supplies in rural Africa; Stop TB Partnership, which works to increase access to tuberculosis treatment; and the Nurse-Family Partnership, which supports programs that offer home visits by registered nurses to low-income, first-time mothers.

NONPROFIT PORTFOLIOS

Root Cause, based in Cambridge, Mass., has recently begun creating similar research reports with financial advisers in mind. Its first batch covers educational groups (specifically, those focused on school readiness) in Massachusetts. Palo Alto (Calif.)-based GreatNonprofits, started in 2007, allows donors, volunteers, and social-service recipients to write reviews à la TripAdvisor or Yelp; it currently has reviews of some 3,000 nonprofits. The opinions are also available on GuideStar. Perla Ni founded GreatNonprofits in the wake of Hurricane Katrina, when people kept asking her where to give. "People who are served by nonprofits know which ones are good and which ones are not," says Ni. "It's like asking people who stayed at a hotel to write a review."

Two groups have taken yet another route: creating portfolios of nonprofits. Recently launched Philanthropedia, based in Menlo Park, Calif., gathers the opinions of experts in different sectors and creates what it calls "expert mutual funds." These are portfolios of nonprofits in areas such as climate change, microfinance, and education, with a dozen or so "holdings" in each. To put together its climate change fund, for example, Philanthropedia queried 139 experts, including funders, nonprofit executives, and academics. Top holdings include the Natural Resources Defense Council, the Union of Concerned Scientists, the World Resources Institute, and the Pew Center on Global Climate Change. "A lot of the other approaches [to rating nonprofits] ask too much of donors," says Philanthropedia Chief Executive Deyan Vitanov.

Partners for Change, based in Chicago, is also working up a mutual fund-like strategy. Its portfolios, which it will share with financial advisers, will mimic those of successful foundations. So a donor interested in global health might be able to invest in a portfolio that looks a lot like the Gates Foundation's beneficiaries. Executive Director Jim Litwin expects to launch the system in the summer. He hopes that by targeting advisers rather than individuals, he'll be able to reach donors with $10,000 or more to give. As Litwin says: "These foundations have already done all the work on what the most effective organizations are, so why can't you leverage that knowledge of where to give?"

For individual donors, all of this information could help in better decision-making. For the field of philanthropy, it could have far-reaching implications. The hope is that if nonprofits know their programs aren't working well, they will revamp them. Also, if more of the $200 billion in annual donations ends up going to the most effective charities, it could push others to combine forces. "We're starting to see a shakeout," says Nancy Kelly, an accountant to nonprofit organizations at the Metis Group, a New York City-based accounting and business consulting firm. "You're seeing more competition for dollars and more merger activity than in the past 15 years. It is forcing nonprofits to look at their operations like a business."

Feldman is an associate editor with Bloomberg BusinessWeek in New York.

U.S. cellphone users donate $22 million to Haiti earthquake relief via text

Image by Swamibu via Flickr

By Thomas Heath
Tuesday, January 19, 2010; A10

The American Red Cross has received more than $22 million in U.S. text-message donations for Haiti earthquake relief efforts, far outpacing the charity's previous record of $400,000 for emergency relief using similar technology.

"It's truly an unprecedented amount for a text campaign," said American Red Cross spokesman Roger Lowe.

The $22 million is roughly one-fifth of the $112 million total that the American Red Cross has so far raised for Haiti, most of which has come through more conventional sources such as corporate and online donations.

The text-messaging effort involves sending the word "Haiti" in a cellphone text message to the number 90999, which automatically adds a $10 pledge to a person's phone bill.

Image via Wikipedia

Wireless providers have said they are forgoing standard text-messaging fees for the Haiti effort.

"We make no money on this," said Verizon Wireless spokesman Jeffrey Nelson.

To get the money to Haiti faster, Verizon said Monday that it transmitted nearly $3 million in text-message pledges to the American Red Cross. Normally, telecommunications companies wait for the user to pay their phone bill, a process that can take a few months, before passing the donation to the charity.

"I think it's great," said Daniel Borochoff, president of the American Institute of Philanthropy, a watchdog group. "They should expedite the funds as rapidly as possible, and I am glad that they are doing that."

Image via Wikipedia

The American Red Cross is not the only group to see a surge in contributions via text messaging. Hundreds of thousands of people have donated using their cellphones. The technology allows charities to tap into new sources of giving, such as young adults.

"The beauty of it is the young people who don't give will give because it's so easy," Borochoff said. "They hit a few buttons and they can show off, and it's the cooler and hipper way than getting out your credit card or whipping out a check like your parents do."

The mobile donation network was set up through the nonprofit Mobile Giving Foundation and is connected with all four major U.S. cellphone carriers -- Verizon, T-Mobile, Sprint and AT&T.

The Associated Press - Muslim groups try to ease fears with accreditation

Image by Koshyk via Flickr

By JEFF KAROUB and DAVID GRANT

DETROIT — As the Islamic holy month of Ramadan winds down, Rami Nashashibi sees a promising fundraising trend for the Chicago charity he runs.

Online donations ranging from $50 to $2,500 to his Inner-City Muslim Action Network have increased over the past weeks as part of an aggressive Ramadan Internet marketing push on the group's Web site and through social networking sites, he said.

But Nashashibi also credits the influx of online donations to his organization becoming one of the nation's first to be accredited by the Better Business Bureau's newest charity wing tailored for Islamic nonprofits.

Those involved in the accreditation program hope it along with the election of President Barack Obama — who has voiced his commitment to work with U.S. Muslims — will allow many Muslim groups to move past the mistrust that has come to define their post-9/11 relationship with the federal government.

After the Sept. 11 terror attacks, Islamic charities came under intense scrutiny in the United States over fears that some had ties to terror groups. The Bush administration shuttered nine Muslim charities, raided six others and froze the assets of one.

The crackdown sent chills through the country's Muslim community as many became fearful about giving to charity, which is called zakat and is one of Islam's five requirements. The American Civil Liberties Union said in a report this summer that some Muslims had stopped donating or limited how much they give out of worry they could be swept up in a federal investigation.

Since then, Islamic organizations have struggled to find ways to erase the cloud of suspicion and ease donors' concerns. Last year, the BBB partnered with Muslim Advocates, a legal organization based in San Francisco, to create the Muslim Charities Accreditation Program, which evaluates nonprofits and trains leaders on compliance with the government's legal and financial rules.

In August right before the start of Ramadan and the Islamic calendar's peak period for donating, Nashashibi's group and two others — the UMMA Community Clinic in Los Angeles and the Islamic Networks Group in San Jose, Calif. — were the first to complete the program's rigorous review.

"Because the Muslim charities have been particularly in the public focus, I think they have a greater interest in demonstrating to the public that they are just like every other charity, they meet standards like everybody else," said H. Art Taylor, president and CEO of the BBB Wise Giving Alliance.

About 17 other Islamic charities are in varying stages of the review process, according to Muslim Advocates. The program's effect on donation levels won't be known until after Ramadan ends, but those involved say it's increased interest and is drawing donors from a wider geographical area.

The 20 standards for accreditation include regular board of director meetings, increased detail and frequency of financial statements and performance assessment of officers.

The key is putting the charities on firm financial and operational footing that leaves no doubt about what they do and how they do it, said Akil Vohra, counsel for the Muslim Charities Accreditation Program.

"The key part of this is transparency," he said. "Donors want to know the same thing: Where is our money going? Where is it being used?"

Nashashibi said one of the challenges has been reconciling anonymous giving, reinforced by a religious and cultural principle that "the best zakat is when the right hand doesn't know what the left hand has given," with the issue of transparent bookkeeping.

"Sometimes that spirit of giving can be perceived to be at odds with the needs, for instance, to list all of your donors in annual reports and all of the financial transparency records," Nashashibi said.

He said his group already performed audits of its books because of contracts with major foundations. But the accreditation process "really helped with putting a little fire under us to usher in an even more intense collection of documents (for review)."

Nashashibi said his community organization hasn't come under government scrutiny and didn't suffer a drop in donations since 9/11. But he said the accreditation has offered "an additional layer of comfort" to donors.

His group seeks to raise $225,000 by Sunday — $30,000 of which it hopes come from online donations — as part of its Ramadan drive called "Grow Your IMAN Campaign."

"What we've seen so far is a broad, diffuse set of donations, particularly online, which could be attributed to the accreditation," said Nashashibi, who is the organization's executive director.

UMMA Community Clinic also has received more online donations. President and Chief Executive Yasser Aman said the accreditation adds "that extra leverage — especially for communities that are not familiar with Muslim institutions or community clinics."

"It's opening the doors to communication," he said of the accreditation.

But while any effort that offers some protection to Muslim charities is worthwhile, it's too early to say if the BBB accreditation will forestall future government scrutiny, said Ibrahim Hooper, spokesman for the Council on American-Islamic Relations.

"Past cases ... seem to be more politically oriented than financially oriented," he said.

On the Net:

• Inner-City Muslim Action Network: http://www.imancentral.org
• UMMA Community Clinic: http://www.ummaclinic.org
• Islamic Networks Group: http://www.ing.org

Related articles by Zemanta

• US Treasury Recognizes Start Of Ramadan (cehwiedel.com)

Charities, Shelters See Wave of Homeless Families

By Alexi Mostrous
Washington Post Staff Writer
Saturday, August 15, 2009

PONTIAC, Mich. -- The lowest point in Lawanda Madden's life came in February, when she woke up on the floor of her friend's run-down house in this city battered by recession. She was shivering with cold. She remembers turning to her 8-year-old son, Jovon, and thinking: "How did this happen to us? How did we become homeless?"

Only 15 months before, Madden, 39, had a $35,000-a-year job, a two-bedroom apartment and a car. She was far from rich, but she could treat Jovon to the movies. She occasionally visited her sister in Chicago and bowled in a local league. She dreamed of going to law school. Then she was laid off and lost everything.

"I've had a job since I was 19," she recalled. "I never imagined I would be without a home. You think it's going to get better -- that it's just temporary -- and then six months goes by, and you wonder, 'Wait a minute -- this might be it.' "

With neat hair and clean clothes, a college education and stable job history, Madden represents the new face of American homelessness.

Across the country, community housing networks, charities and emergency shelters are seeing a flood of people like her -- mothers driven out of their homes by the economic collapse. Even as the economy shows signs of improving, the number of homeless families keeps going up. In more and more cases, these people have never been homeless before.

More than half a million family members used an emergency shelter or transitional housing between Oct. 1, 2007, and Oct. 1, 2008, the latest figures available from the Department of Housing and Urban Development. The number of homeless families rose 9 percent, and in rural and suburban areas by 56 percent. Women make up 81 percent of adults in homeless families, and tend to be younger than 30 with children younger than 5.

In some areas of the country, family homelessness has almost tripled since 2007, new figures obtained by The Washington Post show. Formerly prosperous areas such as Bergen County, N.J., and Hillsboro, Ore., have been particularly affected, with increases of 161 percent and 194 percent, respectively. Oakland County, where Madden lives, has experienced a 111 percent jump in the number of families seeking shelter or emergency housing since 2007.

"And it's going to get worse," said Marc Craig, president of the Community Housing Network in Oakland County. "Thousands of people here will lose their unemployment benefit in the next few months. Many of them will become homeless."

The Obama administration announced last month a $1.5 billion package focused on tackling first-time and family homelessness. The funding, which lasts for three years, represents a change from President George W. Bush's approach, which limited most HUD funding to the chronically homeless with substance-abuse or mental-health problems.

"There's been a funding gap for a long time," Craig said. "It's good there's been a change in approach, but the new money is just a Band-Aid. It's got to continue."

The shift is also evidenced in the District, where the number of homeless families is listed as 703, a 20 percent increase over last year. But these figures -- like the HUD statistics -- heavily underestimate the number of homeless families, experts say, as they do not count those who cram themselves and their children into friends' houses, "couch surf," or sleep four to a bed in cheap motel rooms built for single occupancy.

"Families, especially, are likely to explore every option before they stay in a shelter," said Jill Shoemaker, who collects homelessness data for the Community Housing Network in Oakland County. "We just have no way of counting them at the moment."

Madden stays day-to-day at the half-finished home of friend Frankie Johnson in a dilapidated suburb of Pontiac. Layers of drywall are stacked on the floor next to giant bales of insulation. There are holes in the wall, and the one bathroom that works leaks. More pressingly, the three-bedroom house is also occupied by Johnson and seven children.

"It's tight," Madden said stoically, sitting on the bare bed she shares with her son. "But at least it's not winter anymore. When we moved in, in February, we didn't have a bed. For a week, there was no heating. The gas people hadn't turned up. Even with jackets, coats and two pairs of socks on, the cold was indescribable."

In a city with unemployment at almost 20 percent, it is perhaps unsurprising that Madden is still without work, 20 months after being laid off from a laboratory testing firm where she worked as a biller. From earning a middle-class wage, she now survives on $118 a week in child support.

"Whenever I see a job come up I apply, but I don't get replies," she said. "I go to the job center three or four times a week." Madden also enrolled in a No Worker Left Behind program, under which she hopes to complete her bachelor's degree in criminal justice. "But a degree is no good if you can't get a job," she said.

And with no job, "there's no mortgage, no savings -- definitely no house."

In Royal Oak, Mich., Kevin Roach is a front-line witness to this paradigm shift. "We've seen a dramatic increase in women and children seeking help," said Roach, executive director of South Oakland Shelter, which provides 30 beds to homeless people in Oakland County. In October, he turned away 770 people, more than half of them from families. "We turned down 320 children. That's a number that's burned in my head."

Even a year ago, Roach said, he would have described a "prototypical" homeless person as middle-aged, male, with mental-health or drug issues. "But in the last months, we've had a teacher and a banker in our program," he said. "A third of our clients once had a steady income." Two months ago, he added, the number of clients with bachelor's degrees overtook those with mental-health problems.

Roach's clients are sheltered by a rotating list of churches and community groups that take them in for a week each. Last week it was the turn of First Baptist Church of Detroit. Over a plate of lasagna cooked by church volunteers, a mother of two, who spoke on the condition of anonymity, told a familiar story. "I moved into my mother's after I was evicted," she said. "But we argued. I think she expected Molly the Maid service. Sometimes you want someone else to load the dishwasher, you know?"

That night, the church's volunteers give the sheltered women makeovers, using make-up scrounged from local stores. "It's amazing how much our guests have changed," said Myrtice Batty, a college professor who has been involved in the church's shelter program for 15 years. "When I first started, there were many more men. Now families are about 50 percent."

The new wave of HUD funding will benefit groups such as South Oakland Shelter, which has just secured a $300,000 grant to provide rental and utility assistance to struggling families. Roach hopes that a concerted outreach effort will reach women like Veronica, 47, a former Ford worker who lives with her 11-year-old son in a tiny motel room near Royal Oak. She declined to give her full name in an interview.

"I remember in June 2008, Ford called a meeting for me and 20 other employees," she explained. "They got us all up and said, 'This is your last day.' I was like 'Whoa.' I knew straight away I couldn't cover $650 a month. We left quietly as we didn't want to be evicted -- you're already embarrassed enough."

After moving between friends and family five times in less than a year, and applying unsuccessfully for 65 jobs, Veronica moved into a $110-a-week motel; her son sleeps on an air mattress at the foot of her bed. "There are so many moments where I don't feel like getting up and putting on clothes, but you do, for him," she said, nodding at John, who wants to be a chemist when he grows up. "And he supports me, too. Sometimes he tells me, 'Don't doubt, believe.' We support each other."

There are thousands of children like John in Oakland County. "This year, the number of students we served was up by a third," said Susan Benson, director of the Oakland Schools Homeless Student Education Program, which advocates for homeless children. Benson estimates the number of homeless students in the county at 4,000 to 10,000. "The average age of a homeless person in Oakland County is just under 9," she said. "Most are doubled up, living with friends, hours away from their schools."

Back on North Johnson Road in Pontiac, Madden finds it difficult to adjust. She used the last of her unemployment benefit to buy a $2,000 car in January -- allowing her to take Jovon to baseball practice and herself to the job center. The car uses up $60 a week in gas, but still providing activities for her son is a priority.

"Entertainment doesn't happen too often," she said. "In 2007, I couldn't buy Jovon Christmas presents. Sometimes I take him to his grandma's because I find it hard to feed him. I want to keep him here, but it's more stable there. Sometimes he screams, 'Don't leave!' "

US Corruption Arrests Shock Jewish Community

By Victoria Cavaliere New York 24 July 2009

Cavalier report - Download (MP3)
Cavalier report - Listen (MP3)

The arrests of more than 40 prominent politicians and Jewish leaders in New Jersey and New York on corruption and money laundering charges have sent shockwaves through the close-knit Syrian Jewish community there.

Federal investigators in New Jersey announced Thursday they had arrested more than 40 people, including public officials charged with corruption. Charges against others included international money laundering, selling counterfeit goods, and the black-market sale of human organs.

Acting US Attorney Ralph Marra Jr. speaks at a news conference with Newark division special agent in charge Weysan Dun (R), 23 Jul 2009, Newark, N.J.

In addition to three mayors, officials arrested five influential rabbis from New Jersey and the New York borough of Brooklyn.

"They used purported charities, entities supposedly set up to do good works, as vehicles for laundering millions of dollars in illicit funds. The rings were international in scope, connected to the city of Deal, New Jersey, Brooklyn, New York, Israel and Switzerland," said Acting U.S. Attorney Ralph J. Marra about the money-laundering scheme.

The rabbis are accused of using their congregations' charitable organizations to launder about $3 million by passing money from alleged illicit activity through their charities' bank accounts. The FBI said the rabbis then kept about 10 percent for themselves.

All of the rabbis come from the close-knit and wealthy Sephardic Jewish communities of southern New Jersey and Brooklyn - and the arrests have put the spotlight on a usually quiet community.

Rabbi Saul Kassin (C) leaves federal court in Newark, N.J., 23 Jul 2009

One of the rabbis arrested, Saul Kassin, is considered the leading cleric of the U.S. Sephardic community, comprised of families that emigrated mostly from the Middle East, Syria in particular, following the formation of the state of Israel in 1948.

Rabbi Kassin leads the largest Sephardic synagogue in the United States, Shaare Zion in Brooklyn, and has written books on Jewish law.

Members of the community have expressed shock and disbelief over the allegations against Rabbi Kassin. Many have been reluctant to speak publicly. One member of Shaare Zion, Ezra Kassin, told reporters he did not believe the charges.

He's just a very honorable person. I can't believe it, I don't believe it. Whatever they want to say, it's hogwash," he said.

Authorities said an FBI "cooperating witness" helped federal investigators gather evidence in the case. Media reports said he was arrested in 2006 for bank fraud.

FBI agent Weysan Dun said the probe seeks to root out corruption in New Jersey, wherever it is found.

"This case is not about politics. It is certainly not about religion. It is about crime, corruption, arrogance. It is about a shocking betrayal of the public trust," he said.

The FBI said the two-year probe is part of a wider investigation into political corruption and money laundering that started 10 years ago.