Archive for August 24, 2011

More on Metrics

Today we’re looking at an organization that aims to improve life for African girls and give them the means to travel more easily to school or for household tasks like carrying water or firewood, while improving their self-esteem as well. This organization has amazing financial metrics: all of its work is performed by volunteers, and through industry connections and a generous group of founders and officers, they spend nothing on fund-raising.  That is, all of the $10 million donated has gone directly to its programs and beneficiaries.

The program staff has established two performance metrics that they report faithfully:

  1. The amount of reduction in travel time for school and household tasks for the beneficiaries; and
  2. The satisfaction of the beneficiaries with the service

The ratings on both metrics are amazingly high.  Couldn’t be better.  Looks like a winning organization, worthy of your support, right?

Before you write that check, you should probably know that “Sports Cars for Africa” has used its $10 million to provide 100 lucky girls each with a $100,000 sports car.  The girls do get to school very fast (Metric #1) and are highly satisfied with the organization (Metric #2).  But perhaps not what you had in mind?

You’ve probably guessed that this is a fictitious example.  But it’s good to keep in mind that as you evaluate organizations, you should look at the metrics they offer.  Don’t blindly accept them. Do they make sense?

Organizations respond to the way they are being measured, and may make some strange decisions if the metrics aren’t properly aligned with the real mission of the organization.

If you want to invest in a real organization that has similar goals, but a more sensible approach to meeting them, World Bicycle Relief gives $134 bicycles, not $100,000 sports cars to community health care workers and other recipients identified by on-the-ground NGO partners.  They have substantial expertise (founded by SRAM bicycle executives)  and train bicycle mechanics to handle repairs locally.  They strive to do as much in-country manufacturing and assembly as possible, further aiding the economy.  And they do a good job of financial transparency.

Why relying on “Fund Raising Effectiveness” might not be enough

 

We gravitate toward objective metrics when evaluating complex problems.   For a new car, that might be horsepower, braking distance or towing capacity.  For non-profits, it’s often “fund raising effectiveness” or related metrics of “overhead” or amount spent on program.  On the surface, it seems a sensible approach:  after all, you want your donated dollars going to educate children or immunize infants, not paying for fund raising consultants or direct mail campaigns.

If I saw the following table, it would be hard *not* to choose Organization A.

Name % of funds spent on program % of funds spent on fund raising
Organization A 100% 0%
Organization B 97% 3%
Organization C 63% 37%

But there’s more to the story.

Imagine that you are the volunteer Executive Director of a small organization that provides bed nets to families in Africa to help stop the spread of malaria and other mosquito-borne illnesses.  Each bed net, with delivery and training, costs $15.

You have $15,000, and could serve 1,000 families.

You brainstorm with your team about how you could raise money to serve more families, and you come up with two promising ideas:

Idea Guaranteed Income Fixed Expense Net Profit
(pardon the pun)
Raffle / Silent Auction $16,000 $1,000 $15,000
Gala $40,000 $25,000 $15,000

What do you do?

Assuming that we had the staff to pull it off, why not do both?  We end up serving an extra 1,000 families for each of the fund raisers that we run.  Go for it!

Now, re-cap the financial impact of these choices:

Scenario income expense # of families helped % of funds spent on program % of funds spent on fund raising
Base level
(no fund raisers)
$15,000 $0 1,000 100% 0%
Base + Raffle $31,000 $1,000 2,000 97% 3%
Base + Raffle + Gala $71,000 $26,000 3,000 63% 37%

By choosing to increase our efforts, to help more families, we have transformed our organization from “Organization A” in the table above to “Organization C”. What seemed a clear choice with some information reverses when more information is revealed. In summary, yes, fund raising effectiveness is important, but keeping in mind the bigger context of how the money is being spent and how many people are being helped is also important.

9/11 Day of Service and Jeremy Glick

There’s a movement afoot to transform the memory of 9/11 into one of civic action.

The site has partnered with All for Good, HandsOnNetwork, VolunteerMatch, and GuideStar to provide search engines for giving and volunteering opportunities.  As I was doing my researching recommended sites for the book, this was exactly the set I came up with.  So, kudos to them for partnering with the best out there, and if you find yourself looking for opportunities for days *other* than 9/11, try going to these partner sites directly (more detail below).

If you happen to be in an area where these sites have critical mass, you may find hundreds of listings each month. When filtering by type of event and date, though, even the more robust lists dwindle to a handful of options. In areas of the country that are less “wired” or less densely populated, the online databases may not yield anything of interest.

Web Sites Listing Volunteer Opportunities

  • All for Good (www.allforgood.org) includes the listings from several other sites, so appears to be the most comprehensive. It offers the ability to restrict the search by geography, cause area, and date range, so is a good place to start.
  • VolunteerMatch (www.volunteermatch.org) is another nation-wide site. The advanced search tab allows restricting the results to those opportunities that are good for kids, teens or groups. Although you can’t easily filter the results to the date(s) you’re interested in, you can sort by date.
  • HandsOn Network (www.handsonnetwork.org) with 70 affiliates and 245 “action centers,” this site lists many opportunities, and has quite a bit of helpful information.

A Memorial to Jeremy Glick

I can’t write about September 11th and giving without remembering one of my co-workers who gave his life on that day. Jeremy Glick was an account manager for Vividence who was on UA flight 93 on his way to a sales meeting in San Francisco.  He was in phone contact with his wife during the hijacking, and was part of the group of passengers who prevented the plane from reaching its intended target.

My “I will”:  “I will honor Jeremy Glick’s memory with a gift to a charity, and sharing that memory with others.”

Three Questions to Uncover your Passions

What inspires you to give back?

Most giving back results from a personal connection to a cause or group.  If you haven’t yet found the cause that drives you to learn more, do more, and tell more people about it, try asking yourself the following Three Questions:

  1. What organizations do you give credit for the person you have become?
  2. What activities bring you JOY that you want to make sure people in the future can do?
  3. When you travel (in your own neighborhood or around the world) what groups do you see that are treated unfairly or need extra help?

Yes, OK, I’ll share my answers to these questions:

  1. What organizations do you give credit for the person you have become?
    (Chronologically…) My church (the United Church of Christ), Boy Scouts, Harvard College, Stanford University, improv, and the Reuters Digital Vision Program.
  2. What activities bring you JOY that you want to make sure people in the future can do?
    Listening to jazz, watching live theater, walking in nature, snorkeling.
  3. When you travel (in your own neighborhood or around the world) what groups do you see that are treated unfairly or need extra help?
    Those suffering from poverty, homelessness, and disasters. Women and girls, especially in the developing world, but in America, too. Cancer patients and their families. Torture victims.

These answers are a pretty good reflection of how I focus my giving back.

Volunteering:

  • I volunteer quite a bit with my church, especially around Peace and Justice issues and our connection to Stanford University.

  • I spent a year in the Reuters Digital Vision Program volunteering with the Grameen Foundation on a project to improve access to microcredit (small loans to women entrepreneurs in the developing world) through software.
  • I view my performances with an improv troupe as giving back (we aren’t paid, and all of the ticket proceeds go to scholarships).

Donating:

  • I make financial gifts to support my church, poverty alleviation and disaster relief efforts, Harvard, the environment, medical research and jazz (in roughly that order).

  • Being an active audience member, seeking out rising jazz talent (attending and tipping!) helps preserve that community.
  • I’ve set up a living trust that will, upon my death, distribute the bulk of my estate to some of the organizations and causes listed here. (Watch for a future blog post on this important topic….)

The Three Questions were the seed that germinated into the book Giving Back. I started trying them out on people in December 2010, and here are some answers that were shared back then.
I invite you to consider your answers, and would love to hear about them, in the comments if you feel like sharing globally, or in email or conversation if that’s more comfortable.

What organizations do you give credit for the person you have become?  What activities bring you JOY that you want to be sure people in the future can do?  When you travel (in your own neighborhood or around the world) what groups do you see that are treated unfairly or need extra help?

The Three Questions as posed to Lisa Chu's Essential Self Extravaganza (Dec 2010)

 

GirlUp Campaign on PBS NewsHour

PBS NewsHour ran a nice segment on the Girl Up Campaign (5:25 clip) yesterday.  It sounds like a great program, sponsored by the UN Foundation.

The idea is to build grassroots support among American teens and tweens to help peers in developing countries stay in school, stay free from child labor, and safe from violence.

The segment also tells the story of identical twin girls born in Vietnam.  One sister was given up for adoption and is now lives in California, a 12 year-old with the dream of going to UCLA and med school.  Aware that her sister, still in Vietnam, faces a reality of hard work with little opportunity, Isabella Solimene is doing what she can, working with GirlUp, to help her sister and girls like her.

Find out more about Girl Up 

Donor Advised Funds

Bottom line:  If you are paying capital gains tax and donating cash to charities in the same year, you’re wasting money.  Giving appreciated securities can be a hassle, but a Donor Advised Fund makes it (more) convenient and simplifies other record keeping.  Schwab, Fidelity, and Vanguard offer “free” accounts.  Get one.


Donor Advised Funds (DAFs) have been gaining popularity recently, but they still don’t occupy their rightful place as the default choice for mid-level givers (those who give in the $5,000+ range across all their donations in a year).

A DAF is sort of like having your own foundation, but the money is pooled with other people’s, and bookkeeping records track who contributed what (and therefore, how much you can subsequently pay out to charitable causes).  You make contributions (typically of appreciated securities) to the DAF on an as-needed basis, and then draw down the funds as you recommend grants to non-profits.

Why should you care about a DAF?

  1. It simplifies things for you.  All your records are in one place, and you can get year-end or longer summaries of your giving.  The deduction comes when you donate to the DAF (not when you recommend a grant to a non-profit), so you typically only have to track a smaller number of donations, rather than every $50 gift that you make over the course of a year.  (Though the DAF keeps track of those for you, too…)
  2. It simplifies things for the agency you’re giving to.  It’s a hassle for most small non-profits to get appreciated securities.  But in order to avoid capital gains tax, you should be giving appreciated securities.  Give them to your DAF, and let them deal with it.  Your local non-profit gets a check, not shares of stock it then needs to sell.
  3. It allows you to be anonymous if you choose (and still get the deduction.)
  4. You can control the timing of the deduction separately from the timing of the gift.  Donate to the DAF now, get your deduction now, and then recommend a grant from the DAF to your alumni association in 2 years for your 35th reunion year.
  5. Gifts cards (offered by Fidelity Charitable Gift Fund  ) let you give someone else (a child or any other gift recipient) the ability to choose a non-profit where the donation goes.  This can be a good way to introduce kids to the practice of charitable giving.

What does it cost?

Not much.  Typically 6/10 of 1% of the assets of the fund are charged on an annual basis.  The trick is, you don’t really need to keep assets in the account.  You can, but mostly, you can fund the account just before you make a round of grant recommendations to your chosen charities, so the DAF itself has only a nominal balance.  In this case, the $100/year minimum fee kicks in (drawn from the DAF itself, so it reduces the amount you can give, but not an expense to you).  Money that you do have in the account istypically invested in some fund or mix (in a similar fashion to the investment options of your 401K, probably), and you pay the management fees on those funds in the same way that you do for a 401K (subtracted from the share price, again reducing the amount available for gifting, but not a direct expense to you.)

Where can you get one?

The major brokerages offer them as a service to their clients.  Here are 3 popular sources.

Provider / URL

Minimum Initial Contribution

Minimum Follow-on Contribution

Minimum Grant to Charity

Offers “Gift Cards”?

Base Fee

Fidelity Investments
www.charitablegift.org

$5,000

$50

Yes

0.6%

Schwab
www.schwabcharitable.org

$5,000

$500

$100

No

0.6%

Vanguard
www.vanguardcharitable.org

$500

No

0.6%

What are other requirements, drawbacks or hassles?

  • As the chart above shows, you do need to have a fairly substantial amount ($5,000) to set up the accounts.  If you give away at least that much in a year, and you have a brokerage account at one of these providers, then I’d say it definitely makes sense to set up a DAF.  If you typically give  $2,500 – $5,000 in a year, but want the convenience of a DAF, you might be able to “double up” and fund the DAF in December 2011 with the money that you would usually donate in 2011 and 2012.  You can then make the grants to your chosen organizations over the course of the two years, so there’s no perceived difference to them.  As the chart shows, once the account is established the minimums for adding to it are much lower ($500 or no limit).
  • The processing done by the DAF provider will also typically take a few days to authorize a gift, so it’s not the best for truly time-sensitive things.

Giving to Somalia, on behalf of 11-year-old Melissa

Bottom Line:  The dire famine situation in Africa, especially Somalia, has been pushed from the headlines it deserves by the Debt Ceiling Debate and financial situation in both US and Europe.  Melissa, an 11 year old, is still paying attention, and wanted help putting her $10 gift into action. Her generosity inspired me to research the options and donate the money to Concern Worldwide US. While I was there, I made a gift of my own. Thanks, Melissa. Your example is inspiring.

Today, one of my church friends told me a heart-warming story.  Her granddaughter Melissa was reading about the famine in Somalia.  When she finished reading the entire article, she ran to her bedroom, opened up her piggy bank, and came back with $10, which she handed to her grandmother and said “Nana, I know you’ll be able to do something to help them with this.”  I admired the young girl’s generosity, as this was a large gift from someone of her age, and her grandmother and I talked about the best way to put it to use.

One option was to use our church giving (United Church of Christ’s One Great Hour of Sharing) as an intermediary for this gift.  Normally, I’d consider that a very good option.  For special appeals, 100% of the donations go straight to the cause, plus through the network of local churches and partnerships on the ground, they often have the relationships with disaster relief organizations already established, so money can be put to work very quickly.  In this case, however, the urgency is high, and since our local church hasn’t made this a special appeal, a gift in the offering plate would likely sit for weeks or months before it made it to its destination.

Instead, I thought an online donation would result in the money getting there more quickly.  I offered to research organizations and make the gift on Melissa’s behalf.

I started at CharityNavigator, which evaluates different non-profits to determine how efficient they are.  They review the IRS 990 forms that non-profits submit, and determine how much of the money goes to fund raising and administrative costs, and how much goes to “program” (the work directly supporting the cause).   They have other metrics for the growth and capacity of each organization, and boil it all down to a four-star scale.  I was surprised that some of the organizations that I respect had earned only 3 stars (Oxfam America, 14% fund raising expenses pulled it down…; World Food Program USA 8% fund-raising, and a negative overall asset level, their site also mentioned that they used a UK clearing bank, which might take an additional cut from your gift) or even 2 stars (Church World Services 11% fund raising, but apparently hurt more due to their anemic growth over the past years).

So, instead of assuming that I knew a good place to go, I searched for charities that matched the keywords “Africa famine”.  Twenty search results came back.  I compared several (a nice feature of Charity Navigator, worth doing the free registration) and then visited the websites of a few of the results that had a 4-star rating.  Confident that Charity Navigator had screened out the organizations that weren’t good stewards of the money, I focused on assessing whether I thought these were effective in delivering the program and communicating their results.  Given that the situation in Somalia is dire, I expected that an organization that was serious about helping would have special web pages and resources linked from their main page about it.  (UCC’s OGHS appeal page was a bit harder to find)  Recent, frequent updates helped build credibility, as well as evidence that they had been working in the region and were well informed and well-staffed, and presented that information to donor prospects.

Ultimately, I selected Concern Worldwide US.  Its 4-star rating included a less than 3% fund-raising expense, modest administrative expenses (3.4%), a strong assessment of their capacity, and a salary for their executive director that was under $100K.  Their website also impressed me with the direct link to a nice summary of the situation and their expertise for handling it.  I donated directly to them via Kintera, and inspired by Melissa’s generosity, multiplied her gift by 10.

The runner up organization I considered was Mercy Corps.  They’re a much larger organization (annual budget $245M vs. Concern Worldwide US $21M), and also got a 4-star rating, but their administrative expenses were a bit higher than Concern Worldwide US’s.  If you wanted to support a larger organization that might have greater scale to make a larger difference, Mercy Corps would be a good choice.

Thank you, Melissa!

Submit your Stories

Now that much of the main content for Giving Back is written, I’m looking to balance the “how-to” framework and resources with more stories from real people.  If you have a good story about how volunteering or donating changed your life, I’d love to hear it, and potentially include it either in the book or as a blog post.

Stories should be short (less than 300 words, about three times as long as this blog entry…)  and first-hand (no anecdotes from around the web, please.) You can submit them at this web form.  If I use your story in the book, I’ll send you a free copy.  Thanks!

Volunteering Ideas for 5 – 9 year olds

You would love to get your elementary school child involved in some service projects, but it seems as if liability concerns have outweighed family involvement, and many non-profit organizations are not willing to accept volunteers under the age of 13.  What sorts of activities can you do with your pre-teen?

Younger children can often bring enthusiasm to a project.  They may not have the physical strength or coordination, long attention spans or the attention to detail required for some projects, and they shouldn’t be involved in projects that involve physical risk or unsupervised contact with outsiders.  Parental involvement is practically a must, though some school, church, or scouting groups may enable sharing the supervisory responsibility.

Here are a few ideas:

  • Arts and Crafts projects:  Making greeting cards or holiday decorations for people that might otherwise be forgotten (soldiers or people in nursing homes, hospitals, or prisons).  Involving others in the crafting process can be part of the volunteer service as well.
  • Environmental:  Under the watchful eye of a parent, adult leader or older youth, children can participate in picking up trash, beach cleanups, planting seedlings, and removing invasive plants up to the limits of their attention span.
  • Senior Citizens:  Visiting senior citizen in a nursing home or their own homes can be mutually beneficial for the elders and children.  Game playing, reading together, or helping out with simple household tasks are things that younger children can do to provide stimulation, conversation and practical assistance for seniors who might otherwise be isolated.
  • Hospitalized children:  A visit from a new friend of the same age can be a great way to cheer up a patient.
  • Food Closets:  Children with adult supervision can help sort, bag and box food donations for distribution.
  • Fund Raising:  Walk-a-thon, lemonade stands, coin drives, can drives or car washes
    As concerns about children going door-to-door have increased, fund raising through neighborhood pledge or gift solicitations or cookie, popcorn or magazine subscription sales have declined.  Still, parents can be involved in the solicitations while the children participate in walking or selling lemonade, or encouraging relatives to share canned food.
Another great resource for ideas is Jenny Friedman’s The Busy Family’s Guide to Volunteering:  Doing Good Together
Do you have other suggestions?  Please add them in the comments! (Comment button is in top header, underneath the post title.)