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Philanthropy Journal of North Carolina – Market plunge lifts hope

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By Todd Cohen

The sour economy and lame markets are putting a hurt on charity, which has a rare chance to shake itself awake and heal itself.

Times of stress are precisely when philanthropy is needed most. To take on the tough problems our communities face today, we need to find ways to do more, not less, and do it differently.

The challenge is to overcome our fixation on measuring charity in dollars and snap out of the trance that curbs what, how and how much we give.

When times are tough, stoking social needs and shrinking financial resources, we scream “whiplash.” Donors, organized philanthropy and government cut back their funding, while nonprofits tuck in their wings and peck for scraps.

Money can indeed make a difference, and contraction of the economy and stock market erodes endowments, individual wealth and tax revenues.

But even in flush times, philanthropy and government can do more.

While required to make annual grants totaling at least 5 percent of their assets, for example, foundations can dig deeper.

In fact, the National Committee for Responsive Philanthropy and others urge foundations to donate a greater share of their assets.

Individual donors also curb themselves, gearing their giving to the tax benefits it will reap, not to charities’ needs. Tax breaks are an important incentive, but the desire to make a difference can be equally powerful, regardless of tax breaks.

Even a fractional increase in the share of their wealth that individuals donate could mean a huge increase in the overall dollars supporting charity, say advocates such as NewTithing Group.

For their part, nonprofits need to kick their “scarcity” habit and stop seeing themselves as beggars in a donors’ world.

Instead of a cosmetic makeover to catch the eye and win the favor of donors and funders, nonprofits need to do some serious soul-searching.

Survival often means caving in, biting your tongue and changing your tune instead of saying what you mean for fear of offending someone with wealth or power.

But nonprofits need to stop muzzling themselves and rearranging their stripes. They must look beyond survival and instead focus on how they most effectively can address the social needs they exist to meet.

Common sense, straight-talking and creative thinking are the keys.

In defining its mission, for example, a nonprofit should state, simply and clearly, why it exists and what it aims to accomplish – no more, no less.

Rooted in that mission, a nonprofit should figure out exactly how to operate to best serve its constituents – and it should scrap anything that strays from its mission.

And based on the business model it creates, a nonprofit should make the case, loud and clear, to secure the resources and partners it needs.

Money is critical, but so are the time, know-how and connections of individuals and organizations in philanthropy, business and government – and nonprofits must find ways to unleash those resources.

Individual donors, organized philanthropies and government officials can and should do much more – even though it may mean a more modest tax break, a smaller endowment or a tax increase to generate needed revenue.

Our communities encompass all of us. To heal and repair them, we need to find new ways to work, and to work together. As the stumbling economy kicks the ground from beneath us, philanthropy needs to find new footing and a new direction.

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