There’s a great article in the Stanford Social Innovation Review titled "A Failure of Philanthropy: American charity shortchanges the poor, and public policy is partly to blame."

This is required reading for anyone interested in philanthropy, and in particular education. Professor Reich writes with awesome clarity and brevity.

He starts by discussing public school foundations. In rich neighborhoods like Ross, CA or Woodside, CA the parents set up a local education foundation which donates money to the school district for new programs in music, arts, PE, etc. Thus, the public schools in these areas are very good, while schools in poorer neighboring cities stink. "Who could fault wealthy parents for wanting to do best for their children?"

The gap between these children and children growing up in disadvantage widens, of course. "What is surprising is that public policies governing philanthropy encourage and reward this gap-widening."

How? Not all 501(c)(3)’s are the same, yet they all confer identical tax benefits to donors. A rich Woodside parent who’s in the top tax bracket only "pays" $650 of her $1,000 donation. Between ’98 and ’03 the federal government has paid $3.5 M of roughly $10 M of donations to the Woodside school foundation in lost tax revenue. Moreover, because of this tax system, your $1k donation to baldness research is worth the same as my $1k to Darfur relief. 501(c)(3)’s do not differentiate on the worth of the philanthropy.

Reich continues by wondering whether philanthropy and private foundations do a good job at redstributing wealth, at serving those most in need. If someone didn’t donate to charity, and thus were taxed on that income, would the government do a better job at distributing the money?

"The public policies designed to support the philanthropic and nonprofit sector represent a wide-scale, costly government intervention."

At least on a percentage of income basis….I wonder what the psychology behind this is. Do all of us have in our heads some artificial number of how much is a right amount to give to charity each year, and then that never changes even as we work our way up the income ladder?

Link: Study Shows the Superrich Are Not the Most Generous – New York Times.

Working-age Americans who make $50,000 to $100,000 a year are two to six times more generous in the share of their investment assets that they give to charity than those Americans who make more than $10 million, a pioneering study of federal tax data shows.

Congratulations to my friends at the BizWorld Foundation for ringing the closing bell at the NYSE today. Pictured below is a student of the entrepreneurship curriculum doing the honors and my friend executive director Catherine Hutton to her right. Founder Tim Draper is behind her.

I don’t need any more material objects except for more books.

So, for Christmas or my birthday, please consider giving to charities I care about on my behalf using my whatgoesaround.org GiveList.

I encourage everyone to set up such a gift so we end this nonsense of giving gifts people don’t want/need/use and instead become "everyday philanthropists."

Are there charities that should be on my GiveList that aren’t? Leave a comment and let me know.

The NYT has a nice section on Giving, including one piece which gets at something I’ve been thinking about for awhile – a lot of charity nowadays isn’t going to the poor. I don’t think families/individuals are being philanthropic of they simply give money to their alma matter. The best colleges and universities still serve the privileged by giving money back to the college you went to, you are perpetuating an instituation which leaves the poor behind. I’ve written in the past about how a lot of aid seems to flow to non-critical causes, since hunger in Africa isn’t exactly close to home.

Ben Stein riffed on this a month ago when he wondered why he still gives money to Yale Law School, when $500 in a $13 B fund has a much less impact than $500 to about a million other charities. After a lot of mail, he changed his POV a week later saying "it’s OK for emotional ties to override reason"; in other words, he likes his Yale, so it doesn’t matter whether giving money there still makes sense.

Link: What Is Charity? – New York Times.

At Harvard University’s current rate of growth, its endowment will be larger than the Bill & Melinda Gates Foundation, the world’s largest foundation, in three years. And while Harvard increased its spending last year on financial aid for undergraduates to $80 million a year, that figure represents less than .5 percent of its $22 billion endowment, and only about 2 percent of the approximately $4 billion it earned last year on its investments.

"For the past 15 to 20 years, educational institutions have been funded primarily by tuition and fees, not donations," Professor Colombo said. "We’re conditioned to think of them as charities, but they aren’t."

Last week’s New Yorker had a good profile (not online) of the Gates Foundation – and the man himself. It was a helpful reminder that the Gates Foundation deploys more money toward certain public health initiatives than entire governments or world organizations do…all without any political or economic restrictions. In many respects what the Gates Foundation says is more important than what the World Health Organization does.

There’s something really appealing about Gates’ work here, and it has nothing to do with the money. It’s about applying the same obsessive nature that made him successful in business and applying it to philanthropy. So often, you see rich people throw around their money to check the "doing good" box. Rare do you see the intellectual brainpower devoted to the cause. Gates could so easily get away with simply being the world’s #1 philanthropist in a pure monetary sense.

Imagine if everyone on Forbes’ Top 20 richest list all applied the same amount of intellectual vigor that Gates does to their philanthropy. Imagine the impact.

The PledgeBank is an awesome site that gives people the confidence of numbers.

The idea’s simple. Make a pledge, any pledge, conditional on a number of other people joining in.

Pledges can be symmetrical (everyone does the same thing)…

    "I will march on the White House in protest at X, if 1,000 people will join me."

    "I will paint my car bright yellow, if 200 people in my city will pledge the same."

…or a-symmetrical (you offer more than you ask from others.)

    "I will take $100,000 worth of sleeping bags to Pakistani earthquake victims if 5 people will join me to help distribute them…"

    "I will host free pizza at 10pm on my street, if a minimum of 30 people pledge to show up."

The reason this is brilliant is that so many people are reluctant to get involved in social change issues because they feel like their one voice won’t do jack. This overcomes that.

(Hat tip: TEDblog)

Google announced today that Google.org will be launching soon, following through on their promise to launch and philanthropic arm of the company. Clearly, this is good news and the Google Foundation will help (and already has helped) millions of people. But I have a few concerns:

• Timing – Where was this a few years ago? It’s important for integrated corporate philanthropy to be woven into a company’s mission from the start. The status quo cannot be "once we have our IPO and make billions, we’ll start donating to charity."
• Focus – So far they are giving a few million here and a few million there. From the Make a Wish Foundation to Doctors Without Borders. A total of 850 different nonprofit organizations have already received grants. Will they be able to monitor the social impact across all these different areas? Will there be a guiding social mission of the Foundation? In many ways this mirrors the for-profit business….
• Staffing – They’ve already given away millions of dollars, but they say "We are working on staffing as well as defining the goals, priorities, and principles of Google.org." Wait – don’t you do that BEFORE giving away the money? Who’s overseeing the follow-through of the grants?

Again, this is fundamentally a *great* thing, but I also think we want to hold non-profits to a higher standard than simple applause for doing good. Particularly when it’s a philanthropic arm of a for-profit corporation, there is no excuse to not run a tight, results-oriented organization. This means getting the right people on the bus before driving it and making sure each dollar is accounted for.

Link: Reason: Rethinking the Social Responsibility of Business: A Reason debate featuring Milton Friedman, Whole Foods’ John Mackey, and Cypress Semiconductor’s T.J. Rodgers.

This is a thought provoking back and forth between the Whole Foods CEO, Milton Friedman, and the Cypress Semiconductor CEO. It’s long so print it out if you’re interested in corporate philanthropy; is maximizing profits the means or the end itself?

I’ve talked some in the past about corporate philanthropy. In the aftermath of Hurricane Katrina, I’ve seen many companies donate money, portions of revenue, or resources to the victims. At my company Comcate, we are in a unique situation since local governments are our clients and over the past few years we’ve trained thousands of employees on effective customer service and case management.

As announced on the Comcate blog, we are donating our CRM software to agencies in the Gulf Coast directly or indirectly affected by the Hurricane. For agencies in that area that have computers, they will reap significant benefits from our case management, code enforcement, GIS, and wireless functionalities. We are encouraging affected agencies to contact us to receive either eFeedbackManager or Code Enforcement Manager free for 12 months including off-site hosting, training, and support. We hope to do our part in responding to this disaster and I tip my hat to all companies contributing as they can to the relief effort.