Nonprofit Chronicles

Journalism about nonprofit organizations and their impact

Amazon-Smile-LogoAmazonSmile brings to mind the observation of late great media critic A.J. Liebling about The New York Times’ fundraising campaigns on behalf of its Neediest Cases.  “Readers are invited to send in money,” Liebling wrote, “while the newspaper generously agrees to accept the thanks of the beneficiaries.”

AmazonSmile is bit like that. The website, created by Amazon.com in 2013, offers

the same products, prices, and shopping features as Amazon.com. The difference is that when you shop on AmazonSmile, the AmazonSmile Foundation will donate 0.5% of the purchase price of eligible products to the charitable organization of your choice.

Nice, right? Well, yes, but not nearly as a nice as it could be.

Two questions need to be asked about AmazonSmile.

First, what has it done to increase the quantity of charitable giving?

Second, what has it done to increase the quality of charitable giving?

The answer to both: Not much. Continue reading

Screen-Shot-2017-02-01-at-3.48.02-PM-750x300As a Peace Corps volunteer in the Dominican Republic in the early 1990s, Eleanor Allen lived with a family whose granddaughter, a child name Maria, died of diarrhea. That changed her life, she says—but not right away.

Trained as civil and environmental engineer, Allen spent 16 years rising through the ranks of CH2M, a big global engineering firm, working on projects around the world, notably the management of the infrastructure of the 2016 Rio Olympics. She worked for another two years as global water director of Arcadis, overseeing a $450m business for the engineering consultancy.

“I had no plan to do nonprofit. I had a great job. Made a lot of money,” Allen told me. Then she was  invited to apply for the job of CEO of Water For People, a nonprofit she knew well. It was her dream job, she said. She was hired in 2015, and has not looked back.

Water For People is not as well known as charity: water or Matt Damon’s water.org but people who know the WASH sector — WASH stands for water, sanitation and hygiene — tell me that it is one of the very best water charities. Water For People stands out in a crowded arena for several reasons: It has a clear and achievable strategy, it focuses on a limited number of countries, it measures its performance transparently and, importantly, it seeks feedback from those it aims to serve.

Water for People has been around since 1991. For twenty years, it operated much like many water charities –installing wells or taps, working in many places (40 countries!), often not asking for much from the communities where it worked and paying scant attention to what happened after a project was built. This approach, which remains all too common today, bred failure.

In Africa alone, an estimated 50,000 rural water points are broken and US$215-360m of investment has been wasted because of poor programming and careless implementation, according to Rethinking Hydro-Philanthropy, an influential 2010 manifesto from Ned Breslin, who then led Water for People. “Africa, Asia and Latin America have become wastelands for broken water and sanitation infrastructure,” Breslin wrote, vowing to build “a new culture of accountability and transparency that transcends the nonsense that currently masquerades as reporting in the sector.” (For more, see my 2015 post, Water taps and information gaps.)

Today, Water for People is focused. That’s smart: most effective organizations do only a few things well. The NGO  aims to provide safe water and sanitation, i.e., toilets to four million people in nine countries–the ones they thought had the best chance of success, based on the strength of their government partners–by 2020. Time-based goals are important; without them, it’s hard to hold nonprofits accountable.

Ultimately, the global WASH crisis–which kills an estimated 840,000 people a year, many of them children — will have to be solved by governments. An estimated 1.8 billion people around the world don’t have safe water to drink and another 2.4 billion lack access to adequate sanitation. But philanthropy can help show the way, and that’s what Water for People aims to do. Continue reading

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Investment bankers: They are not delivering value to foundations

With a collective $800 billion in assets under management, America’s big foundations spend vast sums of money to buy investment advice. They’re getting little, if anything, of value in return.

Their own investment offices, and the Wall Street banks, hedge funds, private equity firms and consultants they hire, when taken together, deliver investment returns that lag behind market indexes, all evidence indicates.

These foundations would do better to call an 800 number at Vanguard or Schwab and buy a diversified set of low-cost index funds.

So, at least, argues Warren Buffett, one of the great investors of our time. In his latest letter to investors in Berkshire Hathaway, Buffett writes:

When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.

The limited data available about foundation endowments bears him out.

It’s not possible to prove that Buffett’s advice would enable foundations to improve their returns–and thus have more money to devote to their grant-making. Most foundations don’t disclose the financial performance of their endowments.

Of the 10 largest grant-making foundations in the US, only two — the MacArthur Foundation and the W.K. Kellogg Foundation — publish investment returns on their websites. MacArthur’s disclosure is exemplary. (So is its performance, perhaps not coincidentally.) I emailed all ten and got nowhere with the rest.

The best evidence about how foundations are managing their endowments comes from an annual study published by the Council on Foundations and Commonfund, a nonprofit asset management fund that serves foundations, colleges and nonprofits. Their most recent survey, which covers the 10-year period from 2006 through 2015, found that returns averaged 5.5 percent per year for 130 private foundations and 5.2 percent per year for 98 community foundations.

Further insight can be gleaned from Cambridge Associates, an investment firm whose clients include foundations, universities and wealthy families. Cambridge tracked the performance of 445 of its endowment and foundation clients and found they generated average annualized returns of 4.97 percent for the 10-year period ending June 30, 2016. (These returns should not be considered Cambridge’s performance track record, a spokesman told me.)

By contrast, Vanguard’s model portfolio for institutional investors, a mix of passively invested index funds, with 70 percent invested in stocks and the rest in fixed income securities, delivered 5.81 percent over the 10-year-period through 2015, and 6.1 percent for the 10-year period ending on June 30, 2016, according to Chris Philips, head of institutional advisory services at Vanguard. (All figures for investment returns are net of fees, meaning fees are taken into account.)

That may appear to be a small edge for Vanguard. But when institutions are investing hundreds of millions, or billions of dollars, small gains compounded over time add up to big money. Money, again, that could be better spent on programs.

Actually, it’s worse, because the figures reported by the Council on Foundations and CommonFund do not include the salaries that foundations pay to their in-house investment offices. The chief investment officers are often the highest-paid executives at foundations, and their deputies do well, too.

Why, then, do foundations continue to pay high salaries and high fees in the pursuit of market-beating returns, when so many fail?

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Thanks to the good people in the animal welfare movement, pigs are being liberated from gestation crates and laying hens are being freed from cages. These animals will suffer less because people care about them, and don’t want them to be harmed; governments and corporations have responded.

Why, then, after a nearly a decade of declining meat consumption, are Americans once again eating more meat, nearly all of which comes from so-called factory farms?

And why, more broadly, do Americans who adore their dogs and cats blithely go on consuming meat products that cause needless suffering to pigs, cows and chickens?

The first question has a simple answer: Beef, pork and chicken prices all fell. Shoppers responded.

The second question remains a bit of a puzzle, says Kristie Middleton, as senior food policy director at The Humane Society of the United States.  Merely talking to meat eaters about what’s on their plate — it’s the flesh of dead animals, folks — is hard. Changing behavior is harder.

“Food is cultural, it’s about family, it’s tradition,” Middleton says. “It’s very difficult to even to talk about our diet choices because there are so many sensitivities surrounding them.”

That hasn’t stopped Middleton from trying. Her new book, Meat-less: Transform the Way You Eat and Live–One Meal at a Time, reflects her belief that gradual shifts in diet might do more good than an all-or-nothing approach. If you want to go meatless, fine, but if you choose to eat less meat, she’s OK with that, too. She doesn’t pull any punches, but her tone is kind and gentle, more likely to spur conversations among friends than to leave people feeling pressures to become vegetarians or vegans.

“I want to give people permission to take positive steps, rather than pressuring them into going 100 percent,” she told me.  “It’s about progress, not perfection.” The book mixes storytelling, sound advice about nutrition, food shopping tips and recipes, including for meat-free versions of pepper “steak” and “chicken” pot pie.
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Jacob Lawrence’s “The migrants arrived in great numbers” (1940-41)

People have migrated for millennia, mostly to escape poverty. Between 1880 and 1930, more than 27 million immigrants entered the US, most from Europe. Some six million blacks left the rural south for cities in the north and midwest between 1910 and 1970, in what’s known as The Great Migration. More recently, Hurricane Katrina prompted one of the biggest resettlements in American history.

Migration is “the simplest and most effective antipoverty program. Pretty much everyone wins,” says Nancy Birdsall, the founder and former president of the Center for Global Development, a Washington think tank.*

And yet, when governments, foundations and nonprofits talk about alleviating poverty, they typically don’t talk about migration. The UN has produced many thousands of words about its sustainable development goals, mentioning migration only in passing.

This is an enormous missed opportunity, argues Michael Clemens, a Harvard-educated economist and a senior fellow at the Center for Global Development. Clemens has been making that argument for more than a decade, notably in an insightful 2010 paper called A Labor Mobility Agenda for Development. He writes:

The globalization of labor—greater mobility for workers across borders—quickly and massively raises migrants’ living standards toward those of rich countries…No known schooling intervention, road project, anti-sweatshop campaign, microcredit program, investment facility, export promotion agency, or any other in situ [in place] development program can surely and immediately raise the earning power of a large group of very poor people to anywhere near this degree.

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Michael Clemens

To his credit, Clemens has been doing more than opining. Working with Sarah Williamson, the executive director of a small NGO called Protect the People and the nonprofit US Association for International Migration, and with funding from the Open Philanthropy Project, Clemens guided and then studied a small-scale effort to bring Haitian farmworkers to the US on temporary visas. It enabled the Haitians to rapidly and dramatically increase their earnings.

“Migration does something that’s almost magical,” Clemens told me. “It immediately transforms the economic productivity of a person.”

Last year, some workers stayed in the US long enough to bring home $5,000 to $20,000, according to Williamson. Some invested that money in school fees for their children. Others had new homes built for their families.

Our program built more houses in Haiti than the Red Cross,” Williamson says.

Alas, after two years, funding has dried up for the Haiti project. That, it seems to me, reflects a dismal lack of imagination among philanthropists, who have poured many millions of dollars into Haiti and don’t have a lot to show for it. (See this and this and this.) Temporary migration, by contrast, has delivered benefits not only to Haitian farmworkers but also to the US economy –and, importantly, it has the potential to sustain itself after reaching scale. Yet its backers struggle to raise money. What’s wrong with this picture? Continue reading

n-climate-change-628x314Since 1990, when the Environmental Defense Fund (EDF) and McDonald’s formed a groundbreaking partnership to reduce waste at the fast-food chain, big environmental nonprofits — EDF, The Nature Conservancy, Conservation International, World Wildlife Fund and the Natural Resources Defense Council — have formed numerous partnerships with big companies.

“Corporate partnerships have been a cornerstone of our approach ever since we launched our first partnership with McDonald’s 25 years ago,” says EDF.

Even Greenpeace, which is best known for its hard-hitting campaigns, formed an alliance with Coca-Cola and Unilever to push for natural refrigerants.

The partnerships have paid off, to a point: Dozens of big companies, from AT&T to Walmart, have worked closely with the green groups to reduce waste, buy renewable energy, curb their carbon emissions, eliminate harmful chemicals and build more sustainable supply chains to protect rainforests or biodiversity.

But, as the Trump administration prepares to launch what is shaping up as unprecedented assault on environmental regulations, the environmental groups are getting little help from their so-called partners in corporate America. At a perilous moment for the environment, big business is mostly silent.

Who won’t American business push for action on climate? That’s the question that I tried to address in a story last week for the Yale Environment 360 website. There’s plenty to worry about. The Trump administration says it intends to withdraw from the Paris climate accord, repeal the Obama’s administration Clean Power Plan, develop fossil fuels including coal and pare back other environmental protections. Its new EPA administrator, Scott Pruitt, is “a leading advocate against the EPA’s activist agenda,” and that’s according to his own bio.

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priceIt’s strange, when you think about it. Most things have a price. A big box of Cheerios costs $3.98. A 1 lb. bag of Starbucks Breakfast Blend costs $12.95. An iPhone 7 costs $649.

But when we donate to charities, what are we buying? And at what cost? That’s more difficult — indeed, it’s often impossible — to know. So how, then, can we compare charities, the way we compare Cheerios to Wheaties, Starbucks to Dunkin’ Donuts or an iPhone to a Samsung Galaxy?

Alas, we can’t.

This makes it harder than it should be to steer our donations to the nonprofits that do the most good.

I’ve been thinking a lot lately about this question of costs. (Please see below: I would love to hear from readers about this.)  Recently, I had the opportunity to discuss it with a couple of staff members at a global federation of nonprofits called WaterAid. Sarah Dobsevage is director of strategic partnerships at WaterAid America and Vincent Casey is senior WASH (which stands for water, sanitation and hygiene) advisor at WaterAid International in London. WaterAid is a global federation of nonprofits that collects money in rich countries and spends most of it in 38 poor countries, working with local governments and nonprofits to “transform the lives of the poorest and most marginalized people by improving access to clean water, sanitation and hygiene.

As I’ve written before (see my 2015 blogpost, Water Taps and Information Gaps), there are dozens, perhaps hundreds, of charities that provide water and sanitation to the poor. Among those listed at GuideStar are charity: water, water.org, Water for People, Bread and Water for Africa, Living Water International, Millenium Water Alliance, One Drop Foundation, World Help, and Water is Life. Big anti-poverty NGOs including Care, Catholic Relief Services, Save the Children and WorldVision operate their own WASH programs. They’re funded by governments, foundations, companies and the rest of us.

The problem for anyone who wants to support providing water and sanitation to the poor is figuring out which nonprofits are effective and efficient. Can transparency around pricing help solve that problem? Or, paradoxically, could pricing get in the way of smarter giving? 

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