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Interview By: Kathleen Brennan, 10/11/06

Jerold Panas is author of The Fundraising Habits of Supremely Successful Boards: A 59-Minute Guide to Assuring Your Organization’s Success. The book is available at www.emersonandchurch.com.

...If you had to single out, say, the top two habits that would carry an organization the furthest, what would they be?

Hmm, that’s a difficult question.
I’d say, first, you don’t allow a mission deficit.

It’s pretty easy for an organization to balance its budget. It can keep cutting expenses, services, staff, maintenance, and by doing this, maybe save enough money to operate in the black.

The problem is, when a board slashes and slashes, it creates a mission deficit. The organization no longer has a real purpose. And that’s far worse than a financial deficit.

The second key habit I’d mention is, board members must be advocates for the organization.  Roaring advocates. Burning in their bones for the work you do.

If they’re not, they probably should be home tending their garden....

http://www.onphilanthropy.com/site/News2?page=NewsArticle&id=6761&JServSessionIdr007=27fre5nb23.app14a

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(Aug. 7, 2006) Buoyed by the establishment of new foundations, a slowly growing economy and support for relief efforts for the Southeast Asia tsunami and Gulf Coast hurricanes, giving by U.S. foundations increased to an estimated $33.8 billion in 2005, according to a new report.

Foundation Yearbook 2006, produced by the New York-based Foundation Center, shows a foundation sector that continues to recover from the economic downtown of several years ago. Foundation giving has now risen by more than 5 percent over the past two years (5.5 percent in 2005 and 5.1 percent in 2004). However, despite these gains, inflation-adjusted giving continues to fall below the record level reached in 2001. 

The report estimates that, accounting for inflation, foundation giving in 2006 will likely be “modest.”

http://www.afpnet.org/ka/ka-3.cfm?content_item_id=23731&folder_id=2345

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PDVSA's social focus sets it apart from most oil companies, which try to maximize output and profits. Even most state-run oil companies, which tend to have bloated payrolls, try to mimic private-sector efficiency and focus entirely on the oil business. PDVSA's shift recalls the role that Mexico's state firm Pemex played for decades in trying to spur economic development by providing jobs and building roads.

Such attention to economic development, however, gives the company less time and money to devote to its oil business. It spent just $60 million on exploration in 2004, compared with $174 million in 2001, according to the company's recently published 2004 financial results. That's bad news for Venezuela, where current wells are so old that their output falls at an average rate of 23% a year, forcing the company to drill new wells just to keep production steady....

The spending goes down well with Yóselin Escobar, a 33-year-old teacher and member of the local education committee, who is trying to convince the oil company to pay a monthly stipend to stay-at-home mothers who look after the children of other working moms. "Thanks to our president, the oil company helps us," she says. "I'm voting for [Chávez] until I die."

[Wall St. Journal, Aug. 1, 2006] http://online.wsj.com/article/SB115439037350022856.html

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... This debate over charity and philanthropy is crucial for America’s foundations. A new and perhaps surprising figure entered the debate in January, when Pope Benedict XVI issued his first encyclical, Deus caritas est (“God is love”), and insisted that there is no substitute for charity—for the direct, personal involvement of individuals and communities in the lives of those who are suffering, those in need of material or educational assistance, or those simply needing the consolation of human contact. Deus caritas est is not, to be sure, a broadside aimed from one side at another in the philanthropy wars. It has things to say, however, that deserve reflection by all concerned, because they challenge us to re-examine our understanding of modern philanthropy...

Click here for article.

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David Roodman and Scott Standley,02/17/2006

Researchers have written hundreds of papers on the causes and consequences of official foreign aid, while paying almost no attention to private overseas giving, by individuals, universities, foundations, and corporations. Yet private giving is significant—some $15.5 billion/year, compared to more than $60 billion/year in public giving—and is in no small part an outcome of public policy. In most rich countries, tax deductions and credits lower the “price” of charity to donors. And governments with low tax revenue/GDP ratios leave more money in private pockets for private charity. ... France’s tax code creates the largest price incentive while those of Austria, Finland, and Sweden offer none. Factoring in the income effect of the tax ratio, Australia, Ireland, Germany, and the United States move to the top, with combined price and income effects sufficient to double private giving. As a result, tax policy appears to have nearly doubled private overseas giving from donor countries in 2003, from a counterfactual $8.0 billion. Two-thirds of the $7.5 billion increase occurred in the United States. Of that, nearly 40% appears to be U.S. charity to Israel. According to 21-country scatter plots, countries with lower church attendance and more faith in the national legislature have lower taxes (stronger income effect), but average levels of targeted tax incentives. Income (GDP/capita) does correlate with private overseas aid/capita, but also with public aid/capita, so that the two aid flows are complementary in magnitude.

http://www.cgdev.org/content/publications/detail/6303 

A common misconception is that tax deductions and credits cause people to donate. Not so. They only lower the real cost that donors incur.--dqk

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Boone Pickens, the often controversial and always colorful Texas oilman turned investor, took advantage of a temporary tax break to make a gift that propelled him into the ranks of the nation's top philanthropists last year.

But what Mr. Pickens gave away with one hand he continues to control with the other.

At the end of the year, he gave $165 million to a tiny charity set up to benefit the golf program at Oklahoma State University, reaping Mr. Pickens a tax deduction. Records show that the money spent less than an hour on Dec. 30 in the account of the university's charity, O.S.U. Cowboy Golf Inc., before it was invested in a hedge fund controlled by Mr. Pickens, BP Capital Management.

"It's all his money, and he's on the investment committee" of Cowboy Golf, said Mike Holder, the university's athletic director and former golf coach, who is on the board. "If a person's making a gift of that size, he can stipulate what he wants it invested in."

Asked whether investing in BP Capital had been a condition of Mr. Pickens's gift, Mr. Holder said no. "That was my decision," he said.

Lawyers said that even though Mr. Pickens still had investment power over the gift, the transaction appeared to be legal under federal law.

"Sadly, it's another case of a rich man manipulating charity for his own benefit," said Marcus Owens, a lawyer who formerly headed the division of the I.R.S. that oversees tax-exempt groups...(for more, see link)

http://www.nytimes.com/2006/02/24/national/24pickens.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1140789793-BBcdUgSMRqqlWVdXWAUPWQ

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from the Wall Street Journal Online

Sky-high oil prices haven't been kind to mutual funds with a mandate for socially responsible investing.

Over the past 12 months, equity funds with a socially responsible bent have gained 11.54%, nearly four percentage points less than the average for all equity funds, according to investment-research firm Lipper. Over three years, it's an annualized 17.2% for socially responsible portfolios versus 20.67% for all equity funds. SRI equity funds account for only 0.62%, or $32.4 billion worth, of all equity-fund assets.

Though criteria vary, socially responsible funds generally avoid sectors that go against certain ethical guidelines. The biggest such sectors are alcohol, tobacco, defense, pornography and gambling.

Energy stocks, particularly those that focus on fossil fuels like oil and coal, also violate the tenets of many socially responsible funds. Much of the group's underperformance of late can be attributed to its relative distaste for the energy concerns that have led the market for the better part of three years. The top two funds on our screen this week, Ariel Fund and Ariel Appreciation, eschew the sector entirely.

But before we paint socially responsible funds into the too-constrained-can't-compete corner, it's worth noting that Lipper only requires that they include some sort of moral criteria in their investment philosophy. That's a pretty low entry barrier that leaves room for a large amount of discretion from fund to fund -- and a lot of stock-picking options for most socially responsible fund managers.

This week, we searched for equity-fund portfolios tagged with the socially responsible investing label. We demanded five-year returns in the top 50% of each fund's classification and expense ratios in the bottom 50%. Each of the nine no-load funds on our list is open to new investors, requires a minimum initial investment of $5,000 or less and has total net assets of at least $50 million.

	URL for this article: http://online.wsj.com/article/SB113988128252573020.html
	Hyperlinks in this Article: (1) http://online.wsj.com/article/SB113805873919454073.html (2) http://online.wsj.com/article/SB113988158415673035.html (3) http://www.smartmoney.com/wsj_fund

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From the encyclical, Deus Caritas Est, #30 b:

Church agencies, with their transparent operation and their faithfulness to the duty of witnessing to love, are able to give a Christian quality to the civil agencies too, favouring a mutual coordination that can only redound to the effectiveness of charitable service.

Numerous organizations for charitable or philanthropic purposes have also been established and these are committed to achieving adequate humanitarian solutions to the social and political problems of the day. Significantly, our time has also seen the growth and spread of different kinds of volunteer work, which assume responsibility for providing a variety of services. I wish here to offer a special word of gratitude and appreciation to all those who take part in these activities in whatever way. For young people, this widespread involvement constitutes a school of life which offers them a formation in solidarity and in readiness to offer others not simply material aid but their very selves. The anti-culture of death, which finds expression for example in drug use, is thus countered by an unselfish love which shows itself to be a culture of life by the very willingness to “lose itself” (cf. Lk 17:33 et passim) for others.

http://212.77.1.245/holy_father/benedict_xvi/encyclicals/documents/hf_ben-xvi_enc_20051225_deus-caritas-est_en.html

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The legal battle between the family that created the endowment fund for the Woodrow Wilson School of Public and International Affairs and Princeton University has escalated over allegations that the Ivy League school has not used the gift as originally intended, the Wall Street Journal reports.

The foundation that controls the endowment was created in 1961 with a $35 million gift from Princeton alumnus Charles Robertson and his wife, Marie, an heiress to the A&P grocery fortune, to support the training of graduate students to serve in the federal government, particularly in the area of foreign relations. But in July 2002, the Robertson family, long unhappy with the low number of Wilson graduates actually going into government service, filed suit to gain control of the endowment and take it to another school. Based on court papers, the family's lawyers allege that Princeton is trying to commingle money from the endowment with funds from the university's general endowment.

http://fdncenter.org/pnd/news/story.jhtml?id=130700004 

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From the Center for Global Development, 01/10/2006

Does foreign aid help develop public institutions and state capacity in developing countries? In this Working Paper, the authors suggest that despite recent calls for increased aid to poor countries by the international community, there may be an aid-institutions paradox. While donor intentions may be sincere, the authors conclude that it is possible that aid could undermine long-term institutional development, particularly in sub-Saharan Africa. ... The conclusions are two-fold: countries which receive a substantial portion of their revenues from foreign aid may be less accountable to their citizens, and they may face less domestic pressure to maintain popular legitimacy. The more aid countries receive from abroad, therefore, the less incentive they have to invest in effective public institutions. ... Also, allocating aid toward alternative development activities might be most beneficial. Funding the eradication of endemic diseases, peacekeeping activities, regional or global public goods, and debt relief would most likely side-step the aid-institutions paradox.

http://www.cgdev.org/content/publications/detail/5646

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