New philanthropists in spotlight – Share wealth with social causes, study says

By Cindy Stiff

WASHINGTON, D.C. — In the scramble to get donations from emerging millionaires, a national group known for its support of the poor and disadvantaged wants to persuade new philanthropists to use their money to help the poor, minorities, women and gays.

The National Committee for Responsible Philanthropy in Washington, D.C., has issued a report,  “Are We Ready: Social change and the coming $10 trillion transfer of wealth.”

The group hopes to influence what has come to be known as the “new philanthropy.”

“We’re offering choices,” say Neil Carlson, editor of the report. “What we’re hoping to do is let people know what the issues and programs are and how they can have a powerful impact.”

The concept of a “new philanthropy” is being fueled by the large numbers being tossed around as one generation prepares to leave its wealth to another. Studies predict the transfer of wealth expected to occur within the next 10 years will total at least $10 trillion.

The desire to secure some of those dollars has charities, universities, foundations and other nonprofits competing for attention.

“There has been a lot of talk about the coming transfer of wealth, but few people have asked how this windfall will affect our society’s most pressing social issues,” says John Echohawk, chairman of the National Committee for Responsible Philanthropy and executive director of the Native American Rights Fund.

“Social change philanthropists are asking those difficult questions and funding the solutions to our most intractable problems,” he says.

Carlson says the NCRP report makes no attempt to suggest specific projects for new philanthropists but recommends organizations that address racial problems, women’s issues and gay concerns or help reduce the gap between rich and poor.

The NCRP says its study shows that community foundations are growing at a rapid rate and are destined to be the biggest winners in the competition for new dollars from new donors.

But the report cautions that community foundations may well become self-serving, accountable only to their primary donors who may have pet projects and may be least likely to support poor constituencies.

Such funds, however, are attractive to philanthropists who want to control how their donations are used, the study says.

“Consequently, progressive foundations are caught in a quandary should they aggressively market donor-advised funds in the hopes of attracting big donors, or keep the grantmaking in the control of activists?” the report asks.

The report addresses the impact of free markets on the philanthropic sector from several perspectives. It says that some experts are optimistic that applying the principles of venture capitalism to grantmaking could build stronger nonprofit programs. But it also says that other experts worry that the spirit of altruism could take second place to profits.

As an example of free-market advocacy, the report examines San Francisco-based Working Assets, a long-distance telephone service and credit card company. The company reported it gives 1 per cent of its revenue. In 1985, that totaled $20 million.

Michael Kieschnick, the company’s president, says that his firm lost money at first by basing its donations on revenue rather than profits. But he says Working Assets was willing to wait out the seven years it took to turn a profit while still making donations.

Instead of writing checks or giving extra discounts to new customers, Kieschnick says, Working Assets spends less money attracting customers, and they stay longer. Customers are given the opportunity to nominate nonprofits that should receive contributions by the company, as well as the amount they should receive.

“We have found that our customers are very sophisticated and really vote for issues they care deeply about,” he says.

The report also says:

* Endowments for women’s issues, including health, are projected to reach $450 million by 2009.

* Fourteen lesbian, gay and bisexual foundations were granted $2.1 million in 1998, up 40 percent from 1996, but the groups still lack significant mainstream funding.

* Commercial financial advisors such as Fidelity Investments and Merrill Lynch are moving into the philanthropic market with promises to lower taxes, shelter assets, and save the world — in that order.

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