Friday, January 23, 2015

How Income Inequality Affects Fundraising


        Income inequality has been in the news quite a bit for the last several years, and during that time, it has only grown worse.  The United States has the dubious distinction of being the most unequal developed country in the world and our inequality even surpasses many less developed countries.  The situation is so bad that Janet Yellen, head of the Federal Reserve Bank, (not an institution known for its socialist tendencies), said in a major speech, “I think it is appropriate to ask whether this trend (inequality) is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.” She noted that income and wealth disparity are near the highest levels in 100 years and probably much higher than for much of American history before then.  Sadly, she offered few solutions, but that she even spoke about it is striking.
To give you a sense of just what this means, look at these startling facts:
--From 2009, the beginning of the so-called recovery, until now, 95% of all the national income gains went to the top 1%  (from economist Emmanual Saez (reported in Poverty and Race, Vol 23, #2, April 2014):
--The bottom 80% of Americans have seen an income drop of about 30% since the 1970’s.  (http://currydemocrats.org/american-pie/)
--Half of the US population lives in or near poverty.  (Wikipedia http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States)
And the facts go on and on.  Follow any of these links, and you will read even more depressing statistics.
       For people who work in nonprofits, income inequality has another consequence, which is that our donors are also increasingly unequal in their ability to give, regardless of their desire to help.
For organizations that rely on foundation grants, the news is mixed.  As long as the market holds, foundation funding will be available, although since foundation funding is only 15% of the total money given in the private sector, that is not enough to fund even a fraction of the number of organizations that will be applying. If the market corrects (a good thing and generally temporary) or if it crashes again (the market goes down and investors begin to flee, generally leading to a recession), foundation giving will once again go down. Because grantmaking is tied to market returns on endowment investments, foundation giving goes up when organizations need it least (when the economy is on an upswing) and down when they need it most (when the economy is doing poorly).
         However, for the thousands of nonprofits that rely, even in part, on a broad base of donors, income inequality is a big problem. Already many of my clients are reporting that while their donors are still giving, they are shaving down the size of their gifts. So $50 donors are giving $40, $35 are giving $25, and so on.  The bottom 90% will continue to give, and will give as generously as they always have, but their giving will reflect that they have less money than they used to.  John Havens, associate director of the Center on Wealth and Philanthropy at Boston College, notes, “the average household donation of the middle class and poor has declined from $1,156 in 2006 to $977 in 2012. These folks really have not recovered from the recession.”  Other studies show that the poor and middle class gave a bigger share of their income to charity in 2012 than in 2006, however, that does not show up as an increase because their income fell during that period. On the other hand, wealthy people decreased the share of their income that went to charity but their overall giving increased by $4.6 billion because their income surged so much.  (CSM  Weekly, ‘Giving Rates Reveal US Income Gap’ Nov 24, 2014, pg 34)
           Inequality affects younger donors even more.  An Urban Institute study from March 2013 reported that while the net worth of those people 47 and older is roughly double that of someone the same age 27 years earlier, today’s adults in the mid-30s or younger have accumulated no more wealth than their counterparts 27 years ago. Specifically, those ages 29 to 37 actually lost significant ground; they saw their average net worth drop 21% between 1983 and 2010. The study’s authors blame stagnant wages, diminishing job opportunities and lost home values during the great Recession, which hit the younger generation the hardest.
        We also know that income inequality causes a psychological reaction in a donor’s willingness to give.  When people for whom $100 or $250 is a large gift are surrounded by stories of mega gifts ($1 million donations are now common), they begin to feel that their donations are not worth making, particularly when they have less money than they used to.  
       So given all this cheerful news, what should your organization do to address the effects of income inequality on fundraising?
1) Learn what fair and just tax policy would look like. We must reverse the redistribution of wealth that is placing the majority of wealth in the hands of the fewest people, and the only way to do that is through progressive tax policies.  Yet most of us don’t really have a lot of opinions about what and how much any person or corporation should pay in taxes.
2) Make sure you thank all your donors and that you truly value all gifts.  This requires focusing on donors and not just donations.  Tell stories of how smaller gifts have made a difference in your work, and how aggregating small donations leads to big change.   Consider not putting your biggest donor’s names in big print and your smaller donors in small print, but rather listing them all in alphabetical order.  (You will have far fewer anonymous donors if you do this.)
3) Focus a lot of attention on your monthly or recurring donors.  People who can’t afford $200 all at once often can afford $20/month.
4) Make sure that common ordinary people feel invited to donate to your organization.  If your newsletters and reports just focus on foundation funding or your corporate sponsors, ordinary people will not think, “I could be a donor.”
        Many social scientists and economists believe that income inequality is one of the most corrosive problems a society can face.  Nonprofits are already being called on to handle the poverty, health, education and environmental problems caused or exacerbated by the widening gap between rich and poor.  We must also show leadership in proposing lasting structural change that will close this gap.  For too long, fundraising programs have simply tried to adapt to whatever was going on in the economy, but now we have to lead the way out of this unequal society—engaging our organizations, our donors, and our sector to agitate and advocate  for real change.
(This blog post is similar to an article I just published in the Klein and Roth e-newsletter:  www.kleinandroth.com/newsletters)

Wednesday, January 14, 2015

On Being A Donor: Post Year End Reflection From a Fundraiser

  Welcome back to my blog
      I took a year off from writing for my blog.  My last post was Dec 13, 2014.
I am not sure why I stopped writing.  I have small “r” reasons, such as I had too much other work, my elderly mother needs more and more care, and I had other writing I wanted and needed to do.  I had intended to take a month off and it wound up being over a year.  I think the bigger reason became that I was out of the habit of writing, and with each passing week and month, getting back into the habit became more difficult.  
     A few people have let me know they miss my blog—bless your hearts!  I hope they are the verbal front of a larger group of silent people who wonder, “Whatever happened to Kim Klein’s blog?” but I am way of flattering myself.   I am returning to the blogosphere because I missed doing these blog posts.  I like taking the time to think about how I can live my life through a commons frame:  what does that mean on a daily basis, how does that inform the way I interpret the news, what habits should I cultivate and what abandon?  I hope people read my posts—if I didn’t want that, I would just write in my journal.  Writing knowing that others will be reading (even if a small number) makes me more disciplined and careful about how I say things.  How I say things is a habit I need to cultivate in every part of my life!  My blog is a gift to myself which I hope others may find useful or enjoyable or provocative. 

Jan 7, 2015:  On Being a Donor
We have just come through the “Season of Giving” which, if I look just at fundraising, would have to be renamed, “The Frenzied Season of Seeking Donations.”  I have never seen so many requests for money jammed into such a short space as I saw this past December.  Now that organizations are counting up how much they raised and deciding whether it was a “good year end” or not,  I think it is useful to go back to one of the greatest summaries of how to think about giving ever written.  It is Maimonides’ “Ladder of Tzedakah” which is a list of eight ways to make a donation in order of their usefulness to the giver.   
Moses Maimonides (1138-1204) was born in Spain and spent most of his adult life in Egypt as a court physician. (http://www.who2.com/bio/moses-maimonides).  “ Tzedakah”  is  a  Hebrew word usually translated as “charity.”  It carries the traditional notion of charity—helping people in need, but also the idea that when we help others, we do the work of God, and in so doing, we help ourselves.  Maimonides knew that giving can hurt or help the giver as much as the receiver and his essay deals mostly with the motives of the giver.  These  eight ways are traditionally presented from best to the worst, but I think they can be more instructive when done in the David Letterman style of worst to best.   
So with apologies to Maimonedes, here they are with a brief commentary from me:
#8:  Gives Unwillingly:  The donor is forced to give.  With 30% of the adult population not being givers at all, and with the top 1% of wealthy people giving both far less than they can afford and  less as a percent of income than the bottom 90%, this way of giving is one of the roles that taxes play:  insuring that everyone contributes to the common good whether they want to or not.    
#7:  The Giver and Receiver Are Unknown to Each Other: for Maimonides, this way of giving insures the receiver complete dignity and forces the giver to let go of control of where the gift goes.  Ideally, this would be the role of foundation giving.  Unfortunately that is rarely the case. Again, this is a role for taxes.    
#6:  Gives Only After Being Asked:  this person gives cheerfully, but does not think of giving unless a request has been made.  I don’t know why this one is so far down in Maimonides list because, as a fundraiser, #6 is our basic premise.  In study after study, when people are asked to consider why they made their last donation, 80% will say, “Someone asked me.”   People who give when they are asked are my kind of folks!
#5:  Gives Before Being Asked:  When you give someone money who hasn’t asked for it, your intention may be good, but the result can be to embarrass the receiver.  I see this one way more commonly with advice—“Have you tried?” “Have you thought of?”  “Maybe you should consider?” 
#4:  Giver Does Not Know Receiver, but the Receiver knows the Giver and #3:  Receiver does not know the Giver but the Giver knows the Receiver:  Smack in the middle of his list is a balancing act.  Suppose I know the identity of an anonymous donor, but that person does not know I know.  Do I tell her?  Do I tell others until almost everyone knows except the donor?  Do I keep the secret? Suppose I pay off a friend’s debt without him knowing?  What does that do to my friendship?  I am carrying a secret from my friend which concerns my friend.  I think Maimonides may have put these in the middle to show how we must be constantly examining our motives, both as givers and receivers, particularly since most people in real life are both. 
#2:  The Giver and Receiver are Unknown to Each Other:  I am glad this is #2, the “we try harder” of the ladder.  Certainly there are far worse descriptions of fair and just tax policy than this. 
#1:  Help a Person Help Him or Herself:  Prevent poverty by creating a society in which people don’t have to ask.  Maimonides left it there, but clearly a society without poverty frees up all voluntary giving for all kinds of other pursuits:  arts, culture, continuing education, expanded libraries and community centers, the list goes on.  More important is that people can ask for what they think will make their communities more livable and their lives more joyful.  Asking and giving will still be present, but more as a dialogue than a power struggle between the haves and the have nots.  So the highest form of giving is not as much about giving as about how a society is structured. 





Friday, December 6, 2013

Reflecting on a Long-Term Trend in Nonprofit Funding, and What You Can Do About It

Posted by Kim Klein

“I would love to give to the Film Festival, but I really have to devote all my giving to my children’s public school.” This sentence, said by a long-time donor in response to a request for funding renewal from a board member at a local Film Festival, helped to start a project called “Nonprofits Talking Taxes." Starting about 10 years ago, many of us started to hear things like this from our donors. At the same time, many of us in the fundraising profession began to notice that organizations with very diverse and dynamic fundraising programs were having a hard time raising money.  This didn’t make sense:  what were we doing wrong?  As it turned, we were doing nothing wrong, but the landscape for fundraising was changing rapidly and the nonprofits most affected by the changes were doing little to address this.

The root of the change was simple: government cutbacks, some of which had begun years earlier, were taking a huge toll on the ability of nonprofits to serve our various constituencies. As government funding was cut, nonprofits funded by government grants sought to raise money from foundations, corporations, and individuals. But the math simply couldn’t work: there is not enough money in the foundation and corporate community, or even from the vast number of individuals who make annual donations, to pay for all that they always paid for AND pick up all that the government no longer paid for.

As most readers of this blog have experienced, this is completely unsustainable: more work and more competition for fewer dollars does not give us healthy, happy communities or dynamic and creative nonprofits.

For the most part, nonprofit organizations did not fight these government cuts, or, if they did, they fought for their own funding but not for the principle that government has a role to play in providing funding. There are many reasons why this is true:
  • individual staff people have little or no time to advocate for funding in addition to their work,
  • sometimes organizations mistakenly worry that advocating for government funding is illegal, and
  • many nonprofits don’t know how to mount an effective advocacy campaign.
There are dozens of excellent organizations working to address these problems, such as the Alliance for Justice, the California Coalition for Civil Rights, CA CALLS, the League of Women Voters, just to name a few. But we also saw a more fundamental problem, which was that, by and large, nonprofit staff did not really have any opinions about the role of taxes and government funding. You can’t express an opinion you haven’t formed. Some staff felt that tax policy was too complicated to understand, or too difficult to change. Some staff felt that there were no good solutions, but most were too busy trying to keep up with their increasing workloads to think much of anything.
 
We set out to change that.

For the past three years, CompassPoint and the Building Movement Project, along with a number of other partners, has been developing, testing and presenting a curriculum designed for nonprofit staff called “Nonprofits Talking Taxes.” Many readers of this blog will be familiar with the workshops which were presented in a wide variety of settings such as staff meetings, professional association gatherings, training events, and webinars. Our goal was to create something that anyone could use with co-workers and colleagues, something that could be used with three people or fifty people.

We evaluated our workshop and changed it many times. We refined the information and now we are pleased to say that we have developed a training curriculum that is fun, informative, and easy to use. We have uploaded it, along with a  (very brief) trainer “manual,” some videos, and some sample webinars onto a website called nonprofitstalkingtaxes.org.

At the CalNonprofits Annual Convention in November, the new toolkit made its debut. In honor of our work and of the role that taxes play for all of us, we gave everyone a sticker that said, “_____ is the reason that I (heart) taxes.” Conference attendees filled in the blank with a wide variety of reasons ranging from public parks, schools, and safety to more esoteric things that taxes support such as health and elevator inspectors, the FAA, the CDC, or the most unusual, volcano research. We created flashdrives with the curriculum loaded on them, and people took those eagerly (signing a form which obligates them to use the information on the flashdrive and not just download their own stuff).

We piloted the final workshop to a room full of people interested in learning more about how to talk about taxes, and how taxes are integral to the common good. We had a fun, collaborative, and positive conversation about taxes, the role they play for nonprofits, and the role they play for all of us by promoting the common good.

Please consider having your own conversation about the common good and the role of taxes in creating a society that works for all of us. As you’ll see when you look at the materials, you don’t need to be an expert to share these ideas. We believe, as the late Sen. Paul Wellstone often said, "We all do better when we all do better." We also know that this is easier said than done, and that it will take the combined brain power and creativity of ALL of us to really move our state and our country to an economy that insures a safety net for everyone, a high quality public school education for our children, a clean environment, an accessible and excellent health care system, a vibrant arts and culture scene, and a quality of life that one would expect in the world’s richest country.

There are a variety of resources to support you as you plan your workshop. We will also continue to monitor the website and add information as it seems necessary. All the material is copyrighted into the Creative Commons, which means everyone is free to use it. All we ask for is attribution.

We are very grateful to our funders and to the 4,000 people who participated in the various iterations of the workshops over the past three years, as well as the 30 people who used the material in trainings.

For questions or comments, please feel free to email me at kim@kleinandroth.com. As one of the founders of this project, I would love to hear from you.

Tuesday, November 12, 2013

Happy Poverty Day

This post was originally written by Sean Thomas-Breitfeld for the Building Movement Project, as part of their blog series on Poverty.  To read more on this topic, head here

You didn't know Poverty Day was a thing? I kid, it’s not really something worth celebrating, but this is the one time a year when we can count on the media to focus on the economy as it is experienced by the millions who are struggling to make ends meet. Most other days we get news about the record profits of the banks that tanked the economy 5 years ago, or the latest worries over how our dysfunctional Congress could threaten the economy by repeating the debt-ceiling drama of 2 years ago. But for today, the headlines read that the poverty rate was “unchanged” and “hold(ing) steady.

But a stable poverty rate is not a good thing when 15% of the population, 22% of children, and more than one-quarter of both the Black (27%) and Latino (26%) communities fall under it. The fact that the poverty rate is “stuck” at a record 46.5 million (it was 46.2 million in 2011) should be a sign to our nation’s decision-makers that we really are living in a country with two contrasting economic realities. Sadly many members of Congress seem intent on shredding the social safety net. This week we could see a vote in the House of Representatives on a heartless Farm Bill that would cut $4 billion a year from the SNAP program (the anti-hunger program formerly known as Food Stamps) at a time when the USDA is reporting that nearly 50 million Americans struggled with hunger last year. And across the states, far too many governors and legislatures have been more interested in playing politics than giving poor people access to lifesaving Medicaid coverage.

For the service providers, organizers and other nonprofit types who are doing their best to step in and help, today’s release of the poverty data only confirms what they see every day in their communities. Workers are struggling to provide for their families, entire neighborhoods haven’t bounced back from the last recession, and more and more people keep falling deeper into economic despair. But it seems that the stories of 15% of the population can’t compete with the 1% who are doing very well right now and paying handsomely to control our “billion-dollar democracy.”

Right now, the organized millions of a few people dominate the public debate and policymaking; and that leads to record poverty, mean-spirited legislation and more austerity politics. The only way to overpower organized money is to organize the millions of people who want and need fair wages, food stamps and a safety net that actually works. It’s going to take all of us.

Tuesday, October 22, 2013

A Commons Frame for Social Justice


Posted by Kim Klein

When people ask how, specifically, a commons frame can be applied to social justice, here is a great example:

 Eminent Domain and More: Green Party Mayor and Nonprofits Create Prototype
From Nonprofit Quarterly

Earlier this year, declaring 2013 “the year of the mayoral races,” a pro-nonprofit political advocacy group called for support for mayoral candidates whose platforms grasped the needs and potentials of nonprofits and proposed policies that would strengthen the nonprofit sector in their communities. The barometer for a mayoral candidate’s nonprofit cred was his or her response to the question, “How will you include nonprofits as part of your economic plan?” To that end, Gayle McLaughlin might be the prototype for this new breed of pro-nonprofit mayor...

Click here to read the full article at nonprofitquarterly.com

Tuesday, September 24, 2013

Social Equity By The Numbers

A commons society is characterized in large part by rough social equity.  Our country moves further and further away from that with each passing year.

This article provides the facts we all need to organize ourselves and our communities to reverse the slide into a society which will be made up of two classes of people:  the super rich and the very poor.

A typical American household made about $51,017 in 2012, according to new figures out from the Census Bureau this week. That number may sound familiar to anyone who remembers George H. W. Bush’s first year as president or Michael Jackson in his prime. That’s because household income in 2012 is similar to what it was in 1989 (but back then it was actually higher: you had an extra $600 or so to spend compared to today).
That sobering statistic gives an indication of where the American middle class appears to be headed. Take a look below at a snapshot of where the middle class is now, the problems they face and what our Facebook audience has to say about squeaking out a living these days.
A note on the term “middle class”: There is no single, universal definition so we turned to economic analyst Robert Reich – who spoke to us this week – for some direction. Reich suggested defining middle class as those with income levels 50 percent above and below the median income. Median is a term that means the “middle of the middle.” Median earnings are a key indicator of how the middle class is doing.

Tuesday, August 6, 2013

Kittens, Cats and the Commons

A few weeks ago, a cat and two half grown kittens showed up in a friend’s yard.   My friend doesn’t have pets and isn’t really an animal person.  I have sometimes teased her by saying it is her only major fault.  She called all the usual places that help you with feral cats and they were all swamped.  The municipal shelter said they had more kittens this year than any other time in their history.  Most places recommended trapping them, fixing them and then releasing them back to her yard.  A few people said you could try to tame them and find homes for them, but that would take a long time and is often impossible with truly feral cats.  My friend was open to trapping and fixing them, and marginally open to releasing them back into her yard.  

To make a long story, which is also not the point of this blog post, short:  we were able to trap the mother and one kitten. (The other kitten took off and remains quite wary).   I took them to a wonderful organization called “Fix Our Ferals” which runs a clinic devoted to spaying and neutering feral cats as well as giving them shots, fostering young kittens and the like.  I brought the kitten and the mother to my house to recover.  They hunkered down in their cages and hissed and spat when I put food in for them.  They ate voraciously but without any gratitude.   I knew the mother had to be released—she showed no signs of being tamed.  The kitten was another story.  He let me pat him and even let me hold him.  He wasn’t happy about it, but seemed to know I meant well.  Ultimately though, the time and effort it would take to tame him, even if that could be done, was more time than I, or the many people to whom I tried to give him, had.  After much thought, I released them both in my friend’s back yard.  We have continued to feed them. 

What I was struck by during this whole period of taming, trapping, neutering and releasing, was the fact that these cats will never understand what happened to them and, particularly, will never think that we did this for their own good and the common good.  To be sure, cats don’t think like that.  They are not regaling the other ferals with how they were betrayed by people who fed them, then kidnapped and tortured them, held them against their will and then, for some reason, let them go.   The mother is not bragging that she never gave in and never stopped hissing.  The kitten isn’t describing how he hoped he would be able to escape when I took him out of his cage, but the time was never right.

The point is how do we get the kind of distance we need to see the big picture of what is really the common good?  In a perfect world I suppose there would be no feral cats.  All cats, like all people, would live in loving homes.  But those of us who work for the common good must be realists, and we must not let the best be the enemy of the good.  If we wait for perfection we may not take the opportunity to do the little we can to make minor improvements.   A big danger is assuming that we see the big picture and not just a big version of our own biases.  There is no one answer to the question of what is the common good, but finding the answers must include conversation and discussion with a wide range of people who have a variety of viewpoints.  In the case of these cats, I talked to a range of people each firm in their opinions about what should happen, which ranged from euthanizing to releasing in a more wild place.  I read studies about feral cats and I discussed all of this with my longsuffering partner and several friends.   I don’t know if I made the absolutely right decision, but I feel confident I made the least wrong decision. 

But the bigger issue is that I had to challenge my assumptions and biases several times during this process, especially including the assumption that I would find the absolutely right decision, know it when I found it, and then make it.  Everyone, feline and human alike, would live happily ever after. That did not happen and probably rarely can.  The common good is a not a constant, but a constant search; a letting go of old ideas, of trying on new ones, and a willingness to live in uncertainty.  For “I’m right and full steam ahead” people like me, that is the bigger picture.