Philanthropy Matters. Financial Literacy for the Long Term. Closing gaps in fiscal knowledge to strengthen nonprofits futures. Also in this issue:

Transcription

1 Philathropy Matters The Ceter o Philathropy at Idiaa Uiversity Volume 19, Issue Fiacial Literacy for the Log Term Closig gaps i fiscal kowledge to stregthe oprofits futures Also i this issue: u u The Millio Dollar List helps doors ad advisors Philathropy ad geder i Lios clubs

2 The Need to Kow How good are you with moey? It s a questio that more oprofits should ask themselves. Fiacial kowledge is vital to oprofits ability to fulfill their missios, yet as a recet Ceter o Philathropy study shows, may oprofit professioals overestimate their fiacial skills. This kowledge gap remids us how much we still have to lear idividually ad as a sector about the myriad aspects of philathropy. As research aswers our questios, it also prompts ew queries, such as those we address i this issue. What chages do oprofits eed to make i their approaches to fiacial maagemet? What ca doors ad their fiacial advisors lear from patters i millio-dollar gifts? How ca service clubs ispire iteratioal philathropy? The Ceter o Philathropy is researchig these topics ad may others part of our ogoig efforts to shed light o ew aspects of philathropy ad ucover the iformatio you most eed to kow. Sicerely, Patrick M. Rooey Executive Director, The Ceter o Philathropy at Idiaa Uiversity Ceter o Philathropy Research Parters (July 1, 2008 Jue 30, 2011) This list recogizes idividuals, corporatios, foudatios, ad orgaizatios that have provided fudig for research at the level of $10,000 ad above. We are grateful for their geerous ad ogoig support of our research programs. Associatio for Healthcare Philathropy Associatio of Fudraisig Professioals Bak of America Merrill Lych Bill & Melida Gates Foudatio* Campbell & Compay CCS Charles Stewart Mott Foudatio* Corporatio for Natioal ad Commuity Service through a iteragecy agreemet with the Natioal Sciece Foudatio* Eli Lilly ad Compay* Ewig Mario Kauffma Foudatio Givig Istitute: Leadig Cosultats to Noprofits Givig USA Foudatio Google.org Fud of Tides Foudatio* Greater Kasas City Commuity Foudatio Idiaa Gratmakers Alliace J. F Maddox Foudatio Johso & Johso Family of Compaies Cotributio Fud Joh Templeto Foudatio* The Kresge Foudatio Lios Clubs Iteratioal Foudatio The Moody s Foudatio Patrick ad Lisa Rooey* Pew Forum o Religio ad Public Life Uited States Chamber of Commerce Uited Studet Aid Fuds, Ic. Uited Way Worldwide The Wilbur ad Hilda Gle Family Foudatio * These Research Parters have specifically supported the Ceter o Philathropy Pael Study (COPPS) at the level of $10,000 ad above. COPPS is also made possible by essetial private support from may other idividual doors. Philathropy Matters Volume 19, Issue The Ceter o Philathropy at Idiaa Uiversity 550 W. North Street, Suite 301 Idiaapolis, IN Telephoe (317) Fax (317) Patrick M. Rooey Executive Director ad Publisher Kim Gattle Director of Fudraisig ad Istitutioal Advacemet Adriee L. Davis, Executive Editor Keith Roach, Maagig Editor Deis Hill, Art Director Sarah Mote, Cotributig Writer Zach Hetrick, Cover Photography Larry Edicott, Patrick Rooey Photo Idiaa Uiversity Creative Services Writig, Desig, ad Productio Philathropy Matters is published by the Ceter o Philathropy at Idiaa Uiversity. The Ceter o Philathropy icreases the uderstadig of philathropy ad improves its practice worldwide through educatio, research, traiig, ad public service. The Ceter o Philathropy is a part of the IU School of Liberal Arts at Idiaa Uiversity Purdue Uiversity Idiaapolis. To subscribe to Philathropy Matters, please register olie at Subscriptio requests ad editorial correspodece may be set to Adriee Davis at adrldavi@iupui.edu, (317) , or the mailig address above. For address chages, please cphldbse@iupui.edu. No iformatio cotaied i this issue of Philathropy Matters should be costrued as legal or fiacial advice. All cotets copyright 2011, the Ceter o Philathropy at Idiaa Uiversity. Permissio is hereby grated to reproduce, distribute, ad display prited copies of this work for oprofit educatioal purposes, provided that copies are distributed at or below cost, ad that the author, source, ad copyright otice are icluded o each copy. This permissio is i additio to rights grated uder Sectios 107, 108, ad other provisios of the U.S. Copyright Act. For commercial uses ad other activities, please cotact Adriee Davis at (317) or adrldavi@iupui.edu. Philathropy Matters is Registered i US Patet ad Trademark Office. Pritig of Philathropy Matters is made possible by Lilly Edowmet Ic. ad the support of our doors. Philathropy Matters Is Olie philathropymatters twitter.com/iuphilathropy

3 Fiacial Literacy for the Log Term Photo by Zach Hetrick To esure a strog future, oprofits eed to close the gaps i their fiscal kowledge. Util recetly, the fiacial focus of midsize oprofits was simply to break eve. That focus has shifted, chagig the ways oprofits operate ad placig greater emphasis o oprofits fiacial kowledge ad gaps i that kowledge. Nearly two-thirds of midsize oprofits those with $1 millio to $5 millio i reveues ow strive for sustaiability over mere subsistece, accordig to ew research from the Ceter o Philathropy at Idiaa Uiversity. I a survey of more tha 500 midsize oprofits, the top two fiacial objectives cited by respodets were maitaiig cash reserves ad fiacial flexibility (38 percet) ad assurig a aual surplus for dow years (27 percet). Meawhile, 24 percet wated to break eve. This is the first large-scale study to documet a dramatic refocus i oprofits fiacial priorities, says Joh Zietlow, a professor of fiace at Maloe Uiversity i Cato, Ohio, who also teaches fiacial maagemet for The Fud Raisig School. They re lookig past survival ad workig toward securig a positio of fiacial stregth, so they ca better serve their missio, eve durig ecoomic dowtimes. Fiacial Literacy ad Kowledge i the Noprofit Sector was sposored by The Moody s Foudatio to help oprofits uderstad ad icrease their levels of fiacial kowledge ad improve their effectiveess. The Ceter surveyed oprofit professioals who are most resposible for their orgaizatios overall fiscal maagemet. Respodets represet a radom sample of primarily huma services oprofits, as well as health, civic, evirometal, arts, ad educatio oprofits. The fidigs reveal ot oly a shift i fiacial priorities, but also a obligatio for oprofits to fortify their fiacial skills to better forecast future eeds, avigate ecoomic istability, ad maage risk. The post-2008 world is a much tougher world for oprofits, says Joh Nelso, maagig director of the public fiace group for health care, higher educatio, ad ot-for-profits at Moody s. I a era of scarcity, oprofits especially wat to optimize their fiacial resources to efficietly ad expeditiously serve their missio, sustai their orgaizatio, ad preserve the good faith of their stakeholders. Mid the Gaps To measure fiacial literacy, respodets were asked three basic fiacial questios, coverig bod prices ad iterest rates, ivestmet risk, ad diversificatio. Although 76 percet of the fiacial maagers said they were kowledgeable i fiacial priciples, just over a third correctly aswered all three questios

4 This discoect suggests oprofits eed more help to idetify gaps i their kowledge ad build their fiacial capacity, says Ua Osili, director of research at the Ceter o Philathropy. For example, oly oe i two respodets correctly aswered the questio about bod prices ad iterest rates, key risk factors i both ivestig ad fiacig. Fiacial literacy icreased with the umber of courses take i accoutig, ecoomics, operatios, ad fiacial maagemet makig a compellig case for oprofit professioals to seek supplemetal educatio at uiversities or through olie courses. Nearly 50 percet of respodets who had completed five or more courses aswered all three questios correctly, versus 37 percet who had take oe or two classes. Empower Your Board Aother way oprofits ca improve their fiacial performace is to recruit more fiacial expertise to their boards. Two-thirds of oprofits reported their boards were actively ivolved i fiacial accoutability. I geeral, though, boards were less attued to their orgaizatios fiacial futures: 53 percet were highly ivolved with strategic plaig, 43 percet with audit ad risk maagemet, ad 27 percet with fiacial sceario plaig. It s too easy to get bogged dow i fiacial reportig, compliace, ad regulatory issues ad udercut the strategic role of the board, Zietlow says. He suggests that oprofits elist oe or two fiacially astute board members to trai the others, so all ca ask good questios, assess risks, develop policies, ad guide fiacial plaig. Cosider Your Cash Reserves Eve with more focus o fiacial plaig, early 50 percet of midsize oprofits had less tha three moths worth of cash reserves available for operatig expeses. Just over a quarter had four to six moths worth, while just uder a quarter had more tha seve moths of cash reserves. Uless a oprofit has very cosistet cash flows ad reliable stadby sources of fuds, Zietlow advises buildig a cash reserve equal to three moths of operatig expeses. Nelso agrees but recogizes the coflict may oprofits face i operatig with a surplus. You wat to deliver every pey of service ad value to your recipiets, but ecoomic ucertaity has awakeed oprofits to the eed to operate at a surplus, if possible, to stabilize the orgaizatio ad help it get through tough ecoomic times, he says. FFMORE IfoFF Cotact Ua Osili at uosili@iupui.edu, Joh Zietlow at jzietlow@hotmail.com, ad Joh Nelso at Joh.Nelso@moodys.com. Read the report at Why I Give Mauree Hackett With more tha 30 years of voluteer leadership experiece, Mauree Hackett is savvy ad strategic about where she gives her time ad moey. I choose to ivest i the thigs I m passioate about, she says. Ad whatever I ivest i, I wat it to be well ru. May doors fail to recogize the importace of ivestig i the ifrastructure of idividual oprofits ad the sector itself, Mauree says. By fudig oprofits strategic plaig, marketig, ad traiig, she says, society helps doors, voluteers, ad professioals better accomplish their goals. These are the people who are makig thigs happe i our commuities, Mauree says. We should be supportig them. She ad her husbad, Jim, have made geerous gifts to support the Ceter o Philathropy s ifrastructure. She first heard about the Ceter while servig o the Greater Housto Commuity Foudatio s board. Now she is vice chair of the Ceter s board of visitors. I like beig part of a orgaizatio that is traiig people to be professioal, she says. The Ceter s programs, leadership, ad staff are outstadig. It s a good ivestmet. We hope our gifts will help the Ceter take its excellece up aother otch ad share its work with more people. Jim ad Mauree say philathropy is a core value for them ad their four childre. We uderstad the importace of givig back, Mauree says. It s had a very positive impact o our lives. 4 Philathropy Matters

5 The study foud that Lios ivolvemet exteds to a wide rage of local ad iteratioal orgaizatios it s ot cofied to club activities. These are people who are potetial doors ad potetial voluteers for other causes, Hirt says. These doors ad voluteers iclude may wome. The Pride of Lios: Service Lios clubs members give ad voluteer for a variety of causes. With 1.35 millio members i more tha 200 coutries, Lios Clubs Iteratioal is the world s largest service club orgaizatio. But just how service-orieted are its members? Ad what roles do wome play i today s Lios clubs? To fid out, the Ceter o Philathropy coducted oe of the first iteratioal surveys of a service club orgaizatio. Sposored by CCS ad Lios Clubs Iteratioal, the study asked Lios clubs members i 12 coutries about their charitable givig, voluteerig, ad club leadership. The survey fidigs affirm what we thought but have t had much data to cofirm, says Rebecca Daou, divisio maager for Lios Clubs Iteratioal Foudatio. The research reveals that Lios members are coected to their commuities i strog ad diverse ways through actio ad egagemet. Prelimiary fidigs idicate that Lios clubs members give ad voluteer at higher rates tha the average populatio i all 12 coutries surveyed. Worldwide, 92 percet of Lios doated to charitable causes i 2010, ad 86 percet voluteered. I the Uited States, 97 percet of Lios respodets doated ad 97 percet voluteered. Amog all Americas, the Ceter estimates that 66 percet gave; 26 percet voluteered, accordig to the Corporatio for Natioal ad Commuity Service. This commitmet to service may be due i part to Lios greater levels of social trust. Lios clubs members i most of the coutries surveyed trust people from other backgrouds sigificatly more tha the geeral populatio does ad higher social trust idicates a greater likelihood of charitable givig. Are Lios more trustig i the first place, ad so they joi a Lios club? Or do they joi a Lios club ad become more trustig because they re costatly exposed to global members ad causes through a iteratioal service club? asks Deborah Hirt, who coordiated the survey for the Ceter. It s probably some of both. The greatest area of membership growth i Lios Clubs Iteratioal has bee i wome members, Daou says. Oe i four Lios clubs members is female, ad that proportio cotiues to grow, especially i the developig world. Coutries such as Nigeria, Chia, Idia, ad Mexico are leadig the growth i female members. I the Uited States, Lios female membership more tha doubled betwee 1996 ad Wome are t just joiig: They play importat roles i Lios clubs worldwide. The study foud that male ad female Lios doated ad voluteered at roughly equal rates i most coutries. Ad more tha half of survey respodets said wome ad me participate equally i the leadership of their clubs. It shows that wome are takig strog iitiative i Lios clubs, Hirt says. They re leaders, ad their ifluece is strogly felt i Lios clubs i the Uited States ad aroud the world. For other oprofits seekig to ivolve service club members, Hirt recommeds egagig me ad wome i ways ragig from offerig hads-o service opportuities for etire clubs to coectig with idividual members ad leaders. Noprofits should also cosider whether their cause aligs with a service club s core values, ad avoid makig assumptios. Although Lios are well kow for supportig sight programs ad eye care, their service icludes a variety of efforts, from youth programs to disaster relief. Do t rule them out, thikig Lios clubs are just focused o sight, they would t be iterested i our work, Hirt says. Go ahead, reach out, ad form relatioships. FFMORE IfoFF Cotact Ua Osili, director of research at the Ceter o Philathropy, at uosili@iupui.edu ad Nicole Brow at Nicole.Brow@liosclubs.org.

6 Doors Millio-Dollar Resource The Millio Dollar List helps philathropists ad their advisors leverage large gifts. F or philathropists plaig gifts of $1 millio or more, the questios of where, whe, ad why to give take o great sigificace. Now these doors ad their advisors ca tur to a ew resource for help: the Millio Dollar List, milliodollarlist.org. Researched by the Ceter o Philathropy at Idiaa Uiversity, this free, searchable database offers doors ad their fiacial advisors access to data ad isights about gifts of $1 millio ad up. The list tracks publicly reported charitable gifts of $1 millio or more by idividuals, corporatios, foudatios, ad other oprofits sice 2000 ad will be updated periodically. The Millio Dollar List is the most comprehesive resource o publicly reported gifts of this size, says Patrick M. Rooey, the Ceter s executive director. Oe millio dollars is a sigificat givig threshold for doors, so gaiig a clear picture of where ad how these gifts are made is a importat step forward i the study of philathropy. 6 P h i l a t h ro py M at t e r s Previously, very little was kow about these gifts, which have a uique ability to chage lives ad commuities. Now, Rooey says, doors ad their advisors ca see which orgaizatios with causes matchig their iterests are receivig large gifts, where their peers are givig, ad where there may be eeds. Iform ad Coect The Millio Dollar List ca help foster collaboratio aroud gifts ad amog doors, ad helps doors ad their advisors make iformed ad strategic decisios about givig. Advisors ca aid doors by searchig for iformatio o gifts by geography, dollar amout, type of charity, idividual door, orgaizatio ame, or other customizable criteria. Let s say a couple i Colorado is cocered about the local eviromet, ad they visit their fiacial advisor for advice. Usig the Millio Dollar List, the three of them could view millio-dollar gifts to evirometal causes i Colorado, which could give them a sese of whether the cause eeds fudig.

7 They could see the top recipiet orgaizatios, which might ispire the couple either to lear more about those orgaizatios or to fid other orgaizatios to which they could make the first millio-dollar gift. They could also fid out which other doors are workig to improve the eviromet i Colorado, which could provide reassurace, raise a red flag, or prompt the discussio of poolig their gift with others for greater leverage. Elle Remmer, presidet of The Philathropic Iitiative (TPI), a leadig oprofit that advises doors o their givig, says, The Millio Dollar List lets doors sca the charitable ladscape to see where there are gaps i fudig by sector or locatio, to fid philathropic parters, ad to discover where they ca magify their impact. It helps them develop their philathropic style ad strategy. The website, which is made possible by a grat from the Bill & Melida Gates Foudatio, also reveals treds ad provides doors ad advisors with cotext for these gifts. For example, a higher percetage of idividuals give mega-gifts of $50 millio-plus tha do corporatios or foudatios. However, about 70 percet of gifts from idividuals were from people who made just oe gift of $1 millio or more, ad early half of those made a sigle gift of less tha $2 millio. The list also shows that millio-dollar-plus gifts ted to be local: 63 percet of idividuals gifts are give to orgaizatios $1 Millio+ Gifts: Distributio of Total Dollars Received by Subsector Publicly reported gifts, % Higher Educatio 25.0% Foudatios 7.5% Public Society Beefit 7.4% Health 6.2% Ar ts, Culture, ad Humaities 5.6% Educatioal Istitutios 5.5% Overseas i the door s state of primary residece. Ad there s a strog correlatio betwee idividuals millio-dollar gifts ad the stock market, with chages i the umber of gifts ad i the dollar amout of gifts closely followig stock market treds. A Catalyst for Trasparecy As doors get more egaged with their givig, they realize the power of beig visible, Remmer says. They see themselves as leaders, as part of the solutio they re tryig to accomplish with their givig ad with that they realize they have a role to play i ifluecig others. It s importat for them to stad up ad be couted. The Millio Dollar List offers a detailed look ito a area of philathropy that, util recetly, was ot well documeted or uderstood. The more gifts that are icluded i the list, the more helpful it will become. Doors icreasigly value trasparecy i philathropy ad are drivig that tred, says Ua Osili, director of research at the Ceter o Philathropy. By providig iformatio about their gifts to the Millio Dollar List, they will ecourage greater trasparecy amog all those ivolved i charitable givig, icrease opportuities to coect with other doors, ad stregthe uderstadig of philathropy. 5.1% Huma Services 4.2% Iteratioal 2.4% Evirometal 1.4% Various FFMOR E IfoFF Cotact Ua Osili at uosili@iupui.edu ad Elle Remmer at ERemmer@tpi.org. Use the Millio Dollar List at milliodollarlist.org. 1.2% Religious Orgaizatios 0.9% Govermetal Source: milliodollarlist.org

8 550 W. North Street, Suite 301 Idiaapolis, Idiaa Chage service requested Take the ext step toward chagig the world. You re already improvig the world. A degree from the Ceter o Philathropy will help you do eve more. Our world-reowed programs will sharpe your skills, deepe your kowledge, ad prepare you to tackle pressig issues i philathropy. We offer several Philathropic Studies degrees: B.A., to prepare for etry-level positios M.A., suited for both curret professioals ad oprofit ewcomers Dual master s degrees i Philathropic Studies ad a related field, such as oprofit maagemet Executive M.A., combiig distace educatio ad residetial study for experieced professioals Ph.D., for future faculty, researchers, ad oprofit leaders Lear more ad apply: