Tips for Practical Giving

This article is part of a package on rethinking charity in the economic crisis. For more, readGiving When It Hurts,Ladling Soup, Raising Hell: Nonprofit insider Robert Egger is out to reform charities from within, and The Revolution Will Not Be Funded: It’s time to liberate activists from the nonprofit industrial complex.

Giving Circles

One way to boost the impact of a recession-sized donation is to join or establish a giving circle, a group of people who pool contributions to support a common cause–women’s rights, environmental racism, homeless queer youth–and then work together to determine which organization(s) will receive their grants.

“Giving circles in general are more participatory, more collective-minded, and more accessible than traditional philanthropy, which is centered around wealthy individuals’ ‘charitable’ giving,” reports Make/shift (Winter 2009). The magazine profiles the California-based Women of Color Giving Circle, whose 11 members each donate $1,000 a year to the project. The circle then doles out grants to groups that are led by women of color, “whose missions focus on women’s rights, economic justice, financial literacy, and immigrants’ rights; and who have annual budgets under $500,000”–or, as one circle member put it, “We are giving funding to folks who are ‘unfundable.’ “

The structure of a giving circle is inherently flexible: Its size, the time commitment involved, and the level of formality are completely up to its members. Members of the Women of Color Giving Circle agree to donate several hours of their time each year to the circle, though the group does have two “silent” members who give money but no time. Some circles open a joint bank account to house their collective dollars; others just write individual checks to the circle’s agreed-upon recipient.

It’s important for members to agree upon a circle’s structure, mission, and activities up front to avoid confusion or discord about what’s expected from members, financially or otherwise.

The Forum of Regional Associations of Grantmakers hosts an exceptionally helpful “knowledge center” on giving circles at its website, www.givingforum.org, complete with sample documents, networking resources, and a 10-step guide to starting your own giving circle.

The Dot.org Boom

Some nonprofit reformers think the future of philanthropy lies in developing new business-charity hybrids that employ capitalism in the service of compassion. Whether you’ve heard it called social entrepreneurship, corporate social responsibility, or the third bottom line, the idea is that firms can do good while they’re doing business–and making a profit. If this sounds like pre-recession capitalist hogwash to you, these innovators are out to change your mind.

Business entrepreneur Jay Coen Gilbert is one of the main drivers behind creating a new corporate model, the B Corporation, for firms with a social or environmental mission. “The ‘B’ stands for benefit and is inspired by Gandhi’s famous line, ‘We must be the change we seek,’ ” reports OnEarth (Winter 2009). Firms are certified by the B Lab, a nonprofit organization, if they meet dozens of performance standards in areas including environmental impact, employee relations, and their benefits to local communities.

“Business is the only institution in society that is capable of solving the social and environmental challenges in front of us at the speed and scale required,” Gilbert tells OnEarth. So far, 163 companies have been certified; organizers want the B Corp to win legal recognition as a new type of corporation with its own tax regulations and government incentives.

Another innovator in philanthropy is a little Internet organization you might have heard about, Google Inc. The corporation’s philanthropic arm, Google.org, is also a hybrid with a unique structure: It doles out many of its charitable grants through a related but legally separate nonprofit entity, the Google Foundation, while also investing in for-profit ventures with social and environmental benefits.

“The structure that Google has established allows me to play all the keys on the keyboard,” Google.org head Larry Brilliant tells Kosmos (Fall-Winter 2008). The foundation has incorporated as a 501(c)(3) nonprofit, but Google.org has not. This way, Brilliant explains, “You can buy a company or start an industry or give a fellowship or lobby. It’s given us more flexibility to think of ourselves as not restricted in the way conventional philanthropy is.”

Where to Give

Seek out programs that help people through hard times. With the social safety net more frayed than ever, Charity Navigator (www.charitynavigator.org) suggests giving top priority to organizations that help people get enough to eat, pay their rent or mortgage payment on time, and keep their electricity turned on: “If they are to meet the growing needs in their communities, charities like food banks, rescue missions, and utility assistance charities need an influx of contributions.”

Remember to give to unglamorous causes. Organizations that serve unpopular causes and marginalized people–drug addiction, men and women in prison–often struggle even when the giving is good; in these lean times, they need your help more than ever.

Support your favorite media outlets. This is not a plug! A flagging economy hits advertising hard, which puts an extra squeeze on already-struggling news organizations. If you want them to keep doing good work–and reporting on the ups and downs of the recession we’ll all be struggling through–don’t forget to resubscribe to the periodicals you most value.

What to Ask

Find out how the organization plans to deal with the economic crisis. The January issue of Kiplinger’s Personal Finance recommends checking out a nonprofit’s working capital ratio to see if it has enough of a cushion to weather a tough year: “A charity can better withstand hard times if it has six months’ to a year’s worth of working capital.”

Are they in the red? Get hold of an organization’s Form 990, available on its website or at GuideStar (www.guidestar.org), suggests Kiplinger’s, and “look for the line that indicates whether the charity has positive or negative assets.” If it’s in the red, your donation may go toward paying off debt rather than delivering services; call the organization to ask if that’s the case.

What are the organization’s goals? In addition to having a clear mission statement, an organization should be able to explain its short- and long-term goals to you. “Good organizations relish this opportunity,” notes Charity Navigator. “They know what they are working toward today and tomorrow,” and they have systems in place to quantify their success–or shortcomings.

Online Resources

Charity Navigator analyzes the financial health and efficiency of more than 5,300 U.S. charities; it breaks down each organization’s expenses, executive compensation, revenue, and so forth. The site also hosts giving-related resources, with tips, articles, a blog, and a wealth of top-10 lists (“10 charities drowning in administrative costs,” “10 of the best charities everyone’s heard of”). The Charities Review Council (www.smartgivers.org) and the American Institute of Philanthropy (www.charitywatch.org) also offer giving tips and analysis. Razoo (www.razoo.com) hosts similar information with a social-networking twist. GuideStar (www.guidestar.org) houses reports and tax forms for 1.7 million nonprofits–it’s a vital destination for anyone who’s serious about the financial side of nonprofit research. The annual Slate 60 (www.slate.com) assesses each year in philanthropy by listing the biggest donations and philanthropists and churning out a bevy of news and reports on charitable giving.

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