Philanthropy class (10/5/2004)

Laura Arrillaga started out with a recap of current funding levels and the breakdown of sources of donations and sectors that received the funding, looking at some year-over-year trends as well. A few points of note:

• $241B total donated dollars was only a 2.8% increase over 2002, one of the smallest increases in the last 40 years. Reasons given included the poor economy, suspicion of large organizations (due to Enron and United Way scandals). Other things that I think play into it: as absolute numbers get higher, you might expect the percentage increase to slow down; 2003 was a year of low inflation--how did it stack up in terms of real dollar change?
  
• Religous giving has dropped from 50% to 36% over the last 50 years.
  
  • Church attendance has also dropped...
    
  • Growth of foundations/non-profits offer more competition to grab charitable dollars
    
  
  
• International giving is up 15% to 2.9% of total in 2003
  
  • Citizens trying to aid regions devastated by war (Afghanistan, Iraq)
    
  • Increasing number of foreigners living in US giving to US organizations for improvements in home countries
    

Some of these last items reflect expected trends for the future of giving: more focus on internationalization, a professionalization of the industry, new vehicles for giving, and increase in the number of foundations, and more involvement on the part of the donors.

From a historical viewpoint, we looked at 6 figures who had a significant impact on the form of today's philanthropy:

1. Carnegie: A paternalistic view of helping people to help themselves led Carengie to give $60M for the construction of 3,000 public libraries. Focusing on a public/private partnership, he structured the grant so that the libraries would have support beyond their initial construction. As the sponsor of the Flexner report, he funded the research that lead to an overhaul of medical education in the US. (See also tie with Rockefeller). Carnegie personally built the model for the insurance/pension fund for teachers that became TIAA-CREF, today the 5th largest such fund with $100B and 1.4M participants. Carnegie's fortune at his death $500M, went 90% into his foundation, and exceeds $1.8B today.
   
2. Rockefeller: One of the most hated men in America as a capitalist, Rockefeller became the single greatest donor (until Bill Gates). His practice of scientific analysis and addressing root causes laid the ground work for the type of analysis done today. He also added to the "professionalization" of the field by bringing in expert Fredrick Gates to manage the strategic giving process. Picking up on the Flexner report produced by Carnegie's Foundation for the Advancement of Teaching, Rockefeller gave $50M to overhaul the medical education process in the US, having a lasting impact in rocketing the US to the forefront of medical research. He tackled specific medical problems as well, eradicating hookworm. The $50M foundation he established in 1909 has grown to more than $3B today.
   
3. Julius Rosenwald: Also a member of Rockefeller's board of directors, Rosenwald made his money running Sears. He donated matching grants for thousands of YMCA and YWCA's in the midwest. His biggest impact was for building 5,300 public schools in the South. He put up about $4.5M of the total $28M, but achieved the rest through contributions from local taxes (64% of total) and other individual donors (21% of total). He felt strongly that the money from his foundation ($125M) should be spent within 25 years of his death. An article discusses this sunset provision of his foundation, a notion that is regaining currency.
   
4. Olivia Sage: The Sage Foundation started in 1906 with a grant of $10M, and in pursuing a course of research, publishing, and influence on public policy, became the forerunner of the modern think tank. They conducted social condition surveys to understand the problems and population.
   
5. Goff: The Cleveland Community Trust, formed in 1914 from $7M of individual gifts, was the first community fund. It has since grown to $1.5B, and empowered individuals to give philanthropically. Since the Trust had the knowledge base, individuals could give to it, secure in the knowledge that their funds would be disbursed wisely. Today's community foundations share this expertise of the local situation within a geographic area.
   
6. Eleanor Ford: Widow of Edsel Ford, and daughter-in-law of Henry Ford, Eleanor was the first Ford who took an interest in philanthropic matters. She took shares of Ford Motor Company and helped to create a strategic plan for the foundation, which has since grown to $10B.