Is Philanthropy’s Clock ‘Ticking Away’? : Strategy: As charitable groups gathered in L.A. to discuss an uncertain future, the buzzword was <i> diversity</i> .

In a best-of-times, worst-of-times climate, representatives of more than 400 grant makers and grant recipients nationwide gathered this week in Los Angeles to plot strategies for keeping philanthropy healthy in the face of federal budget cutbacks and staggering social problems.

Delegates to the 10th-anniversary meeting of the Independent Sector were buoyed by some good news: A survey conducted for their coalition by the Gallup Organization shows that more Americans are contributing more money and time to causes and, significantly, those between the ages of 25 and 44, often depicted as me-first materialists, are leading the way in giving.

Still, there was a pessimistic edge to messages delivered by speakers during the four-day session. The buzzword was diversity --the imperative for not-for-profit groups to diversify their boards and their programs to meet the needs of a population that is increasingly multiethnic, multiracial, and split into haves and have-nots.

As Independent Sector President Brian O’Connell said in an interview, “We are doomed to failure when people who don’t know the problems first-hand plan for ‘those poor folks.’ ”

Those problems include escalating poverty, hunger, homelessness and crime.

Linda Wong, president of California Tomorrow, addressing the opening session, described a society in which there is an urgent need to rethink social, economic and political values and, at the same time, growing fragmentation and separation.

In California, she pointed out, the majority of voters are 40 or older, white, with incomes of at least $40,000, while 40% of the population are people of color, poorer and younger.

Will existing organizations be able to retool themselves to respond to meet the needs of the latter? “The clock is ticking away,” Wong said.

Raul Yzaguirre, president of the National Council of La Raza, zeroed in on predictable consequences of “undereducation” of blacks and Latinos. In 1988, he pointed out, three of four whites were high school graduates, but only five of eight blacks and one of two Latinos were. But by the year 2,000, he noted, only one in seven jobs will not require a diploma.

The United States faces “a major mismatch” between needs and skills in the work force, Yzaguirre said.

He called on foundations and corporations to fund public-policy analysis leading to educational reform, quality day-care programs and job training, with efforts concentrated on “the working poor.”

Peter F. Drucker, author and management consultant and a professor at Claremont Graduate School, told the nonprofit groups that they must sharpen their management skills and run their organizations “better than businesses.” Whereas good intentions once were thought to be enough, he said, “Somehow, the Good Lord likes competence.”

He announced the formation of the Peter F. Drucker Foundation for Nonprofit Management, headed by Frances Hesselbein, formerly chief executive officer of Girl Scouts of the U.S.A. The foundation, funded by private gifts and royalties from Drucker’s books and book cassettes, will reward an innovative nonprofit organization with a $25,000 award each year, starting in 1991.

For the nonprofit sector, Drucker told the conference, the “key to survival” is to make donors active partners in decision-making.

In the past, he told a news conference, people would be urged: “Join our board. You’ll never have to do any work.” Today, he said, a prospective board member demands a clear understanding of the mission and of his or her role in that mission.

By an economic yardstick, nonprofits “are a declining industry,” still getting only 2% of the Gross National Product, a percentage unchanged since 1830. Because “the biggest givers are older people,” he added, “we face a sharp decline. If we don’t reverse this . . . we’ll be in serious trouble.”

The overall disintegration of community has drastically affected traditional ways of fund raising, Drucker said. “Even in a small town in Nebraska,” he observed, today “nobody raises an eyebrow if you don’t go to church”--and put something on the plate.

He spoke of the specter of a cut in allowable deductions to charities, one of the federal budget deficit-trimming proposals: “This is basically a way to enable the rich to be richer . . . now (they) have an excellent reason for not giving.”

With 750 member groups--about evenly divided between donors (foundations and corporations) and the nonprofit groups they fund--Independent Sector represents a range of interests and causes that is, to say the least, eclectic. As one speaker put it, it ranges “all the way from soup kitchens to the Ford Foundation.”

There are strange bedfellows: the American Lung Assn. and the Philip Morris Cos., the Child Welfare League of America and the National Council of Senior Citizens, the Sierra Club and the Weyerhaeuser Co. Foundation, the Fresh Air Fund and Chevron U.S.A. Inc., the Heublein Foundation and Mothers Against Drunk Driving.

With an annual budget of $4.4 million--most of it from grants, gifts and membership dues--Independent Sector has lobbied to protect tax deductions for charitable giving, published resource manuals for nonprofits and, in 1986, initiated a “Give Five” campaign, asking everyone to give five hours a week and 5% of their income to the cause of their choice.

Discussion topics at this annual meeting included the role of funders and nonprofits in fighting AIDS, how to combat youth gangs, new directions in community care of the chronically mentally ill and civil rights strategies for the ‘90s.

There was a good turnout for a session on “Prime Media; Prime Messages; Prime Time: Building the Right Matches.” It promised tips on how nonprofits can influence the entertainment industry and get their messages into prime time TV.

Panelist Paul Allen, director of communications for the Natural Resources Defense Council, part of the L.A.-based Environmental Media Assn. Consortium, cited as a positive example an association-initiated “Murphy Brown” episode on recycling.

He cautioned cause-oriented groups to remember, however, that there are times when their message may get muddled--”You’re going to have to yield to art . . . people who need to create conflict and drama and emotion.”

And, he added, if the cause is to be given attention, it must be compatible with commercial success--”The environmental bad guys” might just be the show’s sponsors.

Coalitions are the best approach, said Jerry Michaud, executive director of the End Hunger Network in Los Angeles. Among the networks, he said, there is an apprehension that “if we say yes to you, we’ll have to say yes to everybody else.”

The End Hunger Network scored a notable success in December, 1989, with “Prime Time to End Hunger,” a week during which popular series--including “Cheers” and “The Golden Girls”--on the three major networks focused on such social issues as hunger and homelessness.

Michaud described this marriage of cause and prime time as a “phenomenon” of the last few years, but added, “the jury’s still out” on long-term impact on the public. And the fallout has been that celebrities have taken up the causes.

Allen, addressing the question of how effective these celebrities are as spokesmen, said the public is now “a little bit inured to that” and the famous must have “some meaningful connection to the cause”--like the late Yul Brynner, who died of lung cancer, and the anti-smoking crusade--and not be there solely to promote their own careers.

Marlene Goland of the Center for Population Options noted considerable success in its efforts to encourage prime time shows to promote safe sex. “Four years ago,” she said, “you couldn’t say the word contraception on network television.” Now, even sitcoms are writing safe sex into the scripts. The center is pushing for contraceptive advertising on the networks.

But, asked the impact of these shows on teen-age pregnancy, she replied, “Who knows?” Teens are skeptical, Goland said--”Basketball stars tell you not to use drugs and then drop dead from cocaine addiction. . . .”

Increasingly, the Independent Sector has been examining ethics for nonprofits. Concerns range from “poaching” on one another’s territory to commercialism of nonprofits through their endorsement of products or services.

The preliminary report of the Independent Sector’s values and ethics committee, presented at the meeting, is in part a response to a public questioning of nonprofits, fueled by media coverage of abuses, frauds and questionable operations.

The offenders are “a tiny, tiny fraction,” said president O’Connell, but any violation is “abhorrent” as charitable giving is “a transaction of trust and faith.”

The report addresses illegal acts, unethical behavior and what it defines as “ethical dilemmas.” Examples of the latter: Is it acceptable to have a family member as paid head of the family foundation? Should grants be given to a corporation’s potential detractors? Should a nonprofit dealing with a controversial cause publish its list of contributors?

Ira S. Hirschfield, director of philanthropy for the Rockefeller Family & Associates, who chairs the values and ethics committee, called this “gray domain” the major concern.

Reviewing the report, Independent Sector members expressed their own ethical concerns: Do donors wield too much power over philanthropies? Are programs that “look sexy” funded at the expense of more valuable projects? Are some nonprofits guilty of designing programs whose major virtue is that a certain funder is sure to go for them? Should trustees of nonprofits be compensated?

The biennial Independent Sector-Gallup survey, based on in-home interviews with 2,727 Americans 18 and older from late March through late May, is the basis for the Independent Sector organization’s talk of “a renaissance of philanthropy” in America. The study shows:

* More than 98 million Americans--up 23% from 1987--volunteered during 1989.

* 75% of households are contributing to charitable causes. The average contribution is $734, up 20%, after inflation, from 1987.

* 86% of those between 35 and 44 years of age--the baby boomers--contributed to charities, the largest single group, while 64% of them volunteered time.

O’Connell observed with satisfaction that the baby-boomers “are finally starting to behave like their parents and grandparents did,” a fact that gives him “great hope.”

The survey also shows that the less affluent are more generous than the wealthy. In 1989, households with incomes under $10,000 gave 5.5% of their income to charities, while those with incomes of $50,000-$60,000 gave 1.7%, those earning $75,000-$100,000 gave 3.2% and those making more than $100,000 contributed 2.9%.

Overall, contributions reflected growing concern about social problems, with more support going to environmental, health and education causes and to youth-oriented groups. The losers included arts groups, which suffered a 17% drop in contributions, and international organizations, down 38%.

Virginia A. Hodgkinson, vice president of research for Independent Sector, analyzed the findings for the organization. In an interview, she attributed the dip in contributions to the arts to tax law changes--”The Van Goghs are now being sold at auction instead of going to museums”--and the declining support of international groups to deepening concerns “about what’s going on domestically” and the absence of a Page 1 international horror story that attracted mass giving during 1989.

As for the generosity of the baby boomers, Hodgkinson speculated that many of them now have children and therefore are concerned about issues such as education and “about others in the community.”

Independent Sector President O’Connell said of the survey, “However good the news is on giving and volunteers, it’s far inadequate to the hopes and dreams” of the people who are served by nonprofits.

For government to trim its programs and transfer some of the load to the independent sector while talking about imposing restrictive tax laws is “grossly unfair,” he added. Any floor on allowable deductions presents a “real danger” to philanthropic organizations, O’Connell added. If the floor is 5% this time, he said, “next time they need money they’ll go to 10%.”

(The Senate budget proposal this time called for a 5% floor for those with incomes in excess of $100,000 a year. That means the taxpayer would be permitted to take only those itemized deductions that exceed the floor.)

Independent Sector recognizes that, while talking diversity, the organization itself has a way to go in that area. Women and minorities, especially Latinos, are under-represented on boards of many of its member groups. It’s pretty much “status quo,” said O’Connell--those on boards “think of those they know who are likely to be of their same ilk.”

It also recognizes that international interests and women’s organizations, as well as major religions, are under-represented in its membership. Women, noted O’Connell, have “been kind of suspicious of anything that smacks of Establishment.”

Churches get 45% of all charitable contributions. There is a lesson to be learned there, O’Connell says: This giving does not reflect some sort of hope for salvation but, rather, the fact that “religious institutions are at the forefront” in tackling community problems at the neighborhood level. (TV evangelism accounts for only a fraction of church giving.)

Independent Sector is talking about the need to target donors more effectively. The United Way-type approach, which seeks broad-based employee support through corporations, is “not going to work as well as it has in the past,” said Independent Sector board chairman Eugene C. Dorsey, adding that it is a reflection in part of the growing number of small businesses with few employees.

“People who have a conviction about that college, that institution, that hospice . . . that’s the core of fund raising,” O’Connell said, “people talking to people.”

At the 10-year mark, Independent Sector has seen several changes that affect its mission. One, said O’Connell, is a decentralization of government, with state and local governments more and more making decisions on “who can march, who can picket, who can raise money.” Another is a growing demand to involve itself in international matters, giving how-to advice.

In an address to the annual meeting, Adele Simmons, president of the John D. and Catherine T. MacArthur Foundation, spoke of “a real interest in helping” groups in the Soviet Union and in Eastern Europe. The MacArthur Foundation is, for example, setting up a think tank in Czechoslovakia.

In Dorsey’s view, the volunteer sector was sobered and strengthened by its realization, in the wake of the 1980s “revolt against welfarism” and resulting budget cutbacks that “government hasn’t done a very good job” of delivering social services. “That may have been a good thing to happen,” he said.

More social problems, less federal money and a nonprofit sector that is one-tenth the size of the government bureaucracy struggling to fill the gap--this is the outlook for the ‘90s.

“We’re not far from chaos,” O’Connell said.

Still, he believes that, increasingly, Americans are unwilling to tolerate poverty, illiteracy, homelessness, hunger. As they get involved in a single cause, he observed, “they begin to look at the systemic causes” and want to correct those.

Dorsey is also cautiously optimistic. The answer, he said, may come from “the incentive of business and industry, an economic impetus” to ensure that in the decades ahead, there is an educated, drug-free, stable labor force. “The highest councils of corporate executives are looking at this problem.”

Charitable Numbers

The biennial IS-Gallup survey, based on in-home interviews with 2,727 Americans 18 and older from late March through late May, determined that:

* More than 98 million Americans--up 23% from 1987--volunteered time for worthwhile causes during 1989.

* 75% of households are contributing to charitable causes. The average contribution is $734, up 20%, after inflation, from 1987.

* 86% of those between 35 and 44 years of age--the “baby boomers”--contributed to charities, the largest single group, while 64% of them volunteered time.

* In 1989, households with incomes under $10,000 gave 5.5% of their income to charities, while those with incomes of $50,000 to $60,000 gave 1.7%, those earning $75,000 to $100,000 gave 3.2% and those making more than $100,000 contributed 2.9%.