The NonProfit Times - June 1, 2008 - (Page 14)

OPINION MARY G. LYNCH GENERAL RAMBLINGS PAUL CLOLERY Make Endowments Pay Billions of university dollars used annually for…nothing ccording to the College Board’s Trends in Student Aid report, colleges and universities awarded undergraduate students a total of $20.6 billion in grant assistance for the 2006-2007 school year. That sounds generous, right? Think again. Heck Of A Job White House continues to be clueless regarding New Orleans he density of some federal officials can truly be stunning. The White House Office of FaithBased And Community Initiatives decided it would be a good idea to hold a conference in New Orleans to discuss disaster preparedness. According to the White House, the conference was “designed to highlight and strengthen the role of faith-based and community organizations in disaster relief and preparedness with a special focus on the Gulf Coast region. The White House Conference on Disaster Relief and Preparedness will discuss ways President Bush’s Faith-Based and Community Initiative vision is engaged across the Gulf Coast region and will offer tools and training for social service organizations as they work to rebuild and sustain their communities.” They can’t be serious. Not only is the idea of this conference in New Orleans an insult to the people who survived Hurricane Katrina, it insults all of the sector leadership who continue to put the city back together without the help of the White House. This concept can only be considered a “Brown-ie” moment, as in when President Based on a Congressional Research Service (CRS) memorandum, in the same year just one school, Harvard University, had an endowment worth $28.9 billion. Yes, billion. Harvard is not alone in its extraordinary wealth.According to the CRS, 61 other colleges or universities also have endowments worth more than $1 billion. With such wealth available to higher education institutions, one might ask: “Why do college tuition costs continue to rise at alarming rates, forcing students to leverage themselves into large amounts of debt?” The answer to this question is highly concerning. Many of the wealthiest institutions, like Harvard, spend less than 5 per- T George Bush turned to Michael D. Brown, his head of the Federal Emergency Management Agency and exclaimed, “You’re doin’ a heck of a job, Brownie.” That was the guy who had to be told folks were stranded at the convention center for days without food and water. He resigned about two weeks after the storm swept across the city on Aug. 29, 2005 and the 17th Street Canal levee was breeched allowing the city to become part of Lake Pontchartrain. The Louisiana Association of Nonprofits, the nation’s major charities such as The Salvation Army and the American Red Cross, and communications groups such as TechNOLA Project, have struggled to get the city’s lights back on.They have pulled together and coordinated activity that should be responsibilities of government. It’s true that it was a free-for-all when the storm hit. It can be argued that the only good response would have been to get people out of there. No matter the gravity of a situation, there are some people who will not leave their homes. What exacerbated the tragedy was that there wasn’t a plan for those people and to evacuate quickly the people who wanted to leave. And, of course, the people of New Orleans still blame the federal government for ignoring decades of warnings that the levees were crumbling and endangering the city. The federal government can’t ignore one of its major economic centers. But a “Do what I say, not what I do” attitude is incredibly arrogant. This column generally starts or ends with an amusing quote that ties things together via irony. The suggestion of this conference is ironic enough. NPT OPINION IRV KATZ Play On Words Reinventing, re-imagining voluntarism and the voluntary sector cent of their endowments each year despite the fact that they grew at an average rate of 17.2 percent during 2007, according to research by the National Association of College and University Business Officers. In a society where a college degree holds increasing importance, it is shameful that colleges and universities are allowing tuitions to skyrocket while school bank accounts and student debts do the same. Furthermore, colleges’ and universities’ tax-exempt status allows them to continue this deplorable behavior unchecked. Endowment money effectively receives two tax benefits. The first is when the donor deducts the charitable contribution and the second is when the donation gains interest. Private foundations face the same tax benefits, but are forced to spend at least 5 percent of assets each year, thus compelling them to contribute to society in return for the tax-exempt status. Educational institutions’ endowments should be subject to the same regulation to combat the current trend toward low payout rates. To compensate society for the CRS-estimated $18 billion in forgone tax revenue that results from colleges’ and universities’ tax benefits, schools should be required to spend at least 5 percent of their endowments each year. Endowments, page 18 olunteering and the voluntary sector have begun to diverge on some levels, and that might well be a good thing. Voluntarism, a term that encompasses both the sector and the acts of individuals, is a bit, well, dated. It has fallen out of fashion, replaced with “nonprofit,”“third” or “independent” for the sector and volunteerism for the acts of individuals. The shift from voluntary to nonprofit (and other variations for the sector) reflects the evolution of the sector but it does not go far enough. Here are a couple of important facts. First, it is more about auspices that define the million-plus nonprofit organizations in the U.S. than a reliance on volunteers or charity. All three are closely associated with our notions of the sector. But, as readers of The NonProfit Times well know, there are sets of organizations in the sector that rely substantially on volunteers and on charitable donations and perform charitable acts. And, there are those that are primarily operated by paid individuals, receive few or no charitable donations, and operate primarily for the benefit of members, an industry or an institution rather than to perform charitable acts. Second, let’s face it, the language we use is, well, language we use.The language V of the sector, and the sector itself, are not understood by the public at large. We have all had experiences where others have expressed surprise that (select all of the following that apply): people in the sector are paid; there are more than one million nonprofit organizations; there are skilled Irv Katz The language of the sector, and the sector itself, are not understood by the public at large. people in the leadership of these organizations who are paid commensurate with the scope of their responsibilities; many nonprofit organizations are complex and sophisticated; and, nonprofit organizations do not operate primarily on charitable donations. Why should the public understand the sector? We enable the confusion by failing to articulate and educate about what is truly unique about our organizations (i.e., “community” ownership), by allowing our sector to be defined by what it is not rather than what it is and what it contributes that is essential to our way of life, by enabling misconceptions of the role of charity and volunteering in our work. Many organizations and many good, even essential, works of the sector rely on charitable donations of time and money. Yet, would it hurt for the public to understand that nonprofits require a large cadre of paid staff as well as volunteers and that government funding, third-party payments, and earned income eclipse charitable donations by a very, very wide margin? Would it hurt for the public to understand that while, yes, the sector is distinct from the other two (for-profit and government), it is also a significant interdependence, particularly with respect to financial and human resources? Clearly, I have tipped my hand. I believe it would help for people to know these things. In fact, I believe it is essential to the viability of the sector going forward. So, why does it matter that the public understands the sector as it is and as it is Opinion, page 16 JUNE 1, 2008 THE NONPROFIT TIMES www.nptimes.com http://www.nptimes.com

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The NonProfit Times - June 1, 2008 First Kroc Center Set To Open It’s Layoffs And A Lawsuit At ARC In The Twin Cities Hospices Put On Life Support Contents Who...When...Where...How...What? Idol Charities Still Waiting For Funds Heck Of A Job Play On Words Make Endowments Pay Donor Management Software Who’s Next? Joining The Masses Online Email Evangelism Three Corners Business Briefs Fiduciaries And The 990 Calendar United Way Refocusing On Programs, Reducing Affiliates NPT Jobs Resource Directory

The NonProfit Times - June 1, 2008

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