Inspired Philanthropy

Your Step-by-Step Guide to Creating a Giving Plan and Leaving a Legacy

Tracy Gary, Nancy Adess, Kim Klein

• Publisher: Jossey-Bass
• Year: 2008
• Print ISBN: 9780787996529
• eBook ISBN: 9780470447369
• Edition: 3
• Topic: Business
• Subtopic: Nonprofit Organizations & Charities
• Index: Business

This newest edition of the classic book shows how anyone can align and integrate values, passions, and dreams for their communities and families into their plans. Inspired Philanthropy explains how to make a difference by creating giving and legacy plans, tells what questions to ask nonprofits, and spells out how to help partner with advisors and nonprofit leaders for inspired outcomes. In addition to overall updates to statistics, the new edition includes a discussion of the implications of the Buffett gift to the Gates Foundation; new legacy planning tools; expanded resources on youth, giving circles, and communities of color; key questions for advisors and donors; and worksheets and resources available on the enclosed CD.

PART ONE

Creating Your Giving Plan

chapter ONE

Giving and the Nonprofit World

“I got it, we had to help each other. We had to work together to get the power on and for things to be made right. We had to give to our neighborhood and to people who were in worse shape than we were. Then our faith and hope returned.”

—Veronica, New Orleans survivor of Hurricane Katrina

In August of 2005, my family members and I were returning to Houston following my mother’s funeral on the very night that more than two hundred buses arrived nearby with exhausted and traumatized people from New Orleans who had been evacuated from the devastation of Hurricane Katrina. As we watched the television news, we agreed that there could be no better recovery from our own personal grief than to extend ourselves to those arriving in need. The next morning, we signed up to help ease those first days of disbelief and fear among those survivors.

Like the people of Houston, people all over the country responded immediately. Book groups or social networks suddenly became shopping circles, forwarding diapers, underwear, can openers, backpacks for students, cell phones, and other items that local businesses in Houston had run out of. Members of churches, synagogues, mosques—peoples of all faiths, always the backbone of relief after disaster—were again devoted, diligent, and generous beyond their traditional service or areas of giving. It was a simply remarkable outpouring of love and concern.

Four years earlier, the world had seen a similar response. Within six weeks of the terrorist attacks on New York City on September 11, 2001, more than $1 billion had been donated to support the bereft families of the nearly three thousand victims of the attacks.¹ Americans throughout the country poured forth their help: donating blood, sending food and money, traveling to New York City to help sort through the wreckage of the collapsed World Trade Center buildings and counsel those who grieved and mourned. Within days, the nonprofit sector—the Red Cross; the United Way; and community, public, and private foundations—along with corporate America set up ways for their constituents, clients, and staff to express their sorrow and despair through compassionate action and gifts to nonprofit organizations serving those affected by the attacks. Giving online, a relatively new convenience that had accounted for less than 1 percent of dollars given, soared to 4 percent of dollars given in just two years.²

There are other examples of people reaching out to give. When only limited international relief came to the victims of the 2005 earthquakes in Pakistan, a group of U.S. medical students and young doctors packed up supplies and managed to push their way into the most devastated of the earthquake-ridden areas, where they spent months giving basic and essential medical care to families and victims, many from remote villages that had not seen doctors for years.

The nonprofit sector and volunteers like these are changing the world by filling—and even anticipating—needs that government and corporate services do not fully address.

In the face of global climate change, worldwide disease, and poverty, as well as natural disasters, can we find ways to learn to live sustainably and peacefully on this precious planet? Two weeks after Hurricane Katrina, former president Clinton launched his Global Initiative, attracting wealthy and highly connected participants who pledge to take a specific action—committing funds, donating needed supplies, or sharing expertise—on such issues as poverty, climate change, global health, and religious and ethnic conflicts. Clinton’s advice to this elite set of corporate and foundation leaders was, “Don’t wait for government and the bureaucracies to fix things. Get in there and decide what difference you can make. Figure out your greatest capacity to help or to leverage change, commit resources and yourself and your team and get working on it.” By December of 2006, after the second Global Initiative Conference, pledges from this group totaled nearly $10 billion and benefited more than one thousand organizations.³

DONOR DIVA

The $300 billion given annually by donors in the United States does make a difference. Carefully placed and leveraged dollars and time can lead to critical and timely change making. Change happens for the world, for the recipients, for the communities that receive gifts, and—not least of all—for the givers. Giving can provide purpose. Giving can connect us to our values and our community. In giving, we define who we are. We are people who honor our traditions. We are people making an impact.

Although not everyone can create this kind of response, it shows that rolling up our sleeves—and working together—is not only the feel-better approach, it is the dependable way for recovery, change, and working proactively to avert future crises.

Can the nonprofit sector and each of us as more strategic donors and leaders be a new organizing force for good and for hope? Most of the groups and institutions that ask for our philanthropic dollars and donors who create the most impact are just that force.

NONPROFITS ARE AN ESSENTIAL LINK

Nonprofit organizations are the most common vehicle for distributing philanthropic funds in the United States, directing money and other resources to areas of need. Nonprofits provide services, education, and advocacy in a multitude of areas—from arts and culture, education, health, and public safety to religion, recreation, counseling, and community organizing.

Nonprofit organizations, sometimes collectively referred to as the independent sector, are legally incorporated organizations exempt by law from corporate income taxes because of their mission to accomplish a defined charitable, humanitarian, or educational purpose. No owner, trustee, or stockholder shares in any profits or losses of nonprofits.

A statistical view shows the enormous contribution of the independent sector to the country’s economy:

• There are more than 1.5 million nonprofit organizations in the United States—schools, hospitals, human service agencies, arts and cultural organizations, and religious institutions.

• The nonprofit sector represents more than $700 billion in revenue,⁴ accounting for 3 percent of gross domestic product.⁵

• About one-fourth of the U.S. population volunteers its time to an organization—representing 61 million people in 2006.⁶

• The nonprofit sector employs an astonishing 11 million people, making up 10 percent of the American workforce—more than all the employees of federal and state governments combined .⁷

Nonprofits of all types play a crucial role in the social, economic, religious, cultural, and community aspects of our lives.

THAT’S A LOT OF MONEY

According to Giving USA 2006, the annual yearbook on American philanthropy, donations of nongovernmental funds to nonprofit organizations totaled an eye-opening $295.02 billion in 2006, an increase of 5.7 percent from 2005. If you’re like most people, you probably think that most of this money comes from corporations and foundations. You’re in for a surprise. As you can see in Figure 1.1, more than 75 percent of the money given away in 2006 came from individual donors (and another 8 percent came from individuals in the form of bequests distributed after their death). Corporations contributed only 4.2 percent of the total and foundations only 12.4 percent. This general pattern has held true for a number of years. Individuals—like you—provide by far the greatest number of charitable dollars.

When most of us think of the philanthropy of individuals, we think of large gifts by very wealthy people. In 1997 Ted Turner’s $1 billion pledge to the United Nations, followed in 1999 by Bill Gates’s $24 billion endowment to the Bill and Melinda Gates Foundation and in 2006 by Warren Buffet’s pledge of $31 billion to the Gates Foundation, have all set an enormously generous and even surreal standard of giving by the wealthiest Americans.

Figure 1.1 . Giving 2006: $295.02 Billion.

Source: Giving USA Foundation, Giving USA 2006. www.givinginstitute.org/about_aafrc/index.cfm?pg=chart1.cfm&ID=xgusa1.

But the wealthy aren’t alone in their giving. Through an irrepressible spirit of generosity, people who toil all their lives at low wages manage to be major donors as well. Oseola McCarty spent a lifetime washing and ironing other people’s clothes. In 1995, when she was 87, she gave $150,000 she had saved from her life’s earnings to the University of Southern Mississippi for a scholarship fund to benefit African American students. Ms. McCarty became well known for her gift, but there are countless others who have given quietly from very modest means. Thomas Cannon, for example, a postal clerk whose top salary had been $20,000, had given by the time he died in 2005 more than $155,000 in the form of $1,000 checks, which he sent to individuals in need whom he read about in newspapers.

In fact, in relation to income, the most generous donors are those who are the poorest. According to INDEPENDENT SECTOR’s Giving and Volunteering in the United States, 2001, 89 percent of American households contribute to charitable organizations. In 1998, contributing households with incomes of less than $10,000 gave an average of 5.3 percent of their household income to charity, while those with incomes of $100,000 or more gave only 2.2 percent. Contributing households with incomes between $40,000 and $50,000 gave on average only 1.4 percent of their household income. The 2005 Giving and Volunteering in the United States reveals $7.8 billion in giving from businesses and corporate foundations making up only a very small share of giving overall. Corporate philanthropy plays a much smaller role in the philanthropic field than the many individual donors collectively contributing in private philanthropy.

Whether you give a lot or a little, when you join the community of donors—to traditional, conservative, or progressive philanthropy—you join millions of other Americans who make charitable gifts and support nonprofit work as a way to express their caring and commitment to one another and the world.

THE ROLE OF PRIVATE PHILANTHROPY

For many years, government partnered with nonprofit social services and arts institutions by helping to support their work. During the past few decades, however, government support of nonprofits has diminished considerably. Extensive budget cuts have made the role of the individual donor increasingly important as more and more nonprofits lose the government funding they counted on. At the same time, institutions and services that have been the responsibility of gove...

Table of contents

• Praise
• Title Page
• Copyright Page
• Dedication
• Foreword
• PREFACE
• Acknowledgements
• THE AUTHORS
• Introduction
• QUICKSTART GUIDE : TEN STEPS TO MORE INSPIRED PHILANTHROPY
• PART ONE - Creating Your Giving Plan
• PART TWO - Strategic and Creative Ways to Leverage Your Giving
• NOTES
• INDEX
• HOW TO USE THE CD-ROM