Bequests, Celebrities, Foundations, and the Economy: a Conference Notebook From National Research Meeting

Too many nonprofit scholars are boosters — ignoring the serious problems that mar the nonprofit world, and the organizations that are involved in activities that harm society, says a prominent philanthropy researcher.

David Horton Smith, founder of the Association for Research on Nonprofit Organizations and Voluntary Action, took the opportunity of the group’s annual meeting here this week to chastise its members for ignoring what he called “the dark side of the nonprofit sector.”

“We have the wrong paradigm,” he said. “We think of ourselves as the angelic sector; we can do no wrong.”

And that brand of boosterism, he said, has kept scholars from examining what he described as deviance among conventional organizations – such as the incidence of fraud – and, more important, the organizations that are themselves deviant, such as terrorist groups and cults.

He likened not studying those phenomena to medical researchers not studying disease, and thus gathering no knowledge of how to identify and root out illness.

Putnam Barber, who is on the editorial board of the association’s scholarly journal, however, countered that plenty of research does examine issues of accountability and governance, and does take a critical approach to what may be wrong and not working at nonprofit organizations. As for studying the real outliers, the deviant groups Mr. Smith points to, he said, that may be outside the association’s purview and best left to scholars in other fields, like anthropology or criminology.

“Are we engaged in studying the structured forms of collective action,” Mr. Barber said, “or are we studying the phenomena of lower-case ‘c ‘ collective action that includes all sorts of evils and perversions?”

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Researchers who were studying the impact of mandatory community service in high school ended up discovering that President-elect Obama may make a big difference in encouraging people to give and volunteer.

An October survey of 365 students at North Carolina State University found that the young people who reported supporting Barack Obama for president were more likely than those who expressed support for John McCain to say that, given the opportunities, they would volunteer at least one hour a week and donate at least $1 a week to a charitable cause.

Richard M. Clerkin, an assistant professor at North Carolina State, said he and his two fellow researchers added the question about the presidential candidates to their mandatory-service survey because of the overwhelming interest in the election.

“Part of the Obama campaign was a call for civic engagement, civic renewal,” Mr. Clerkin said. “The numbers tell us that may have resonated with some of these folks.”

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Francie Ostrower, an associate scholar at the Urban Institute, in Washington, gave a preview at the meeting here of a forthcoming report on a seldom examined corner of the foundation world — limited–life foundations, grant makers that instead of operating into perpetuity have set a date by which they must distribute all their assets.

The report will be based on information extracted from a 2003 study of the attitudes and practices of more than 800 private foundations, 70 of them with so-called sunset provisions. It will also be based on interviews, conducted this year and last, with the leaders of 29 foundations that either are scheduled to shut down at a specific time or have seriously considered doing so.

Ms. Ostrower, who is a professor at the University of Texas at Austin,, said the report is expected to challenge some assumptions about limited-life foundations, such as that donors commonly chose a time limit for their grant making to help them focus on specific philanthropic goals. Few limited-life foundations were established for that reason, she said. Instead, she said, sunset provisions exist for a variety of reasons, including motivation as simple as donors not feeling their children or grandchildren would remain interested in the causes they support.

An assumption that does hold, Ms. Ostrower said, is that foundations with a sunset provision adhere closely to the founder’s original intent even after the founder has died.

Whatever the results of the study, though, Ms. Ostrower said that foundations of all kinds could benefit from considering a sunset option. Such deliberation, she said, can help grant makers clarify their goals.

******* Two trends in corporate philanthropy — growing efforts to hire outside organizations to handle grant making and an emphasis on employee volunteering — may accelerate in the down economy, a researcher told scholars and nonprofit officials at the conference here.

Turning over the distribution of grants and, even, the decision-making behind them, to intermediary organizations, like United Ways, can save businesses money, said Karabi C. Bezboruah, a lecturer at the University of North Texas. Providing incentives for employees to volunteer, such as paid time off, she said, is also a way for companies to support good works without spending a lot of extra cash.

“Corporations still want to look good and still want to be involved in their communities even when the economy is bad, or maybe even more so when the economy is bad, but they just are more cost conscious,” Ms. Bezboruah said in an interview following a conference session where she presented findings from her study of corporate giving at ten Texas companies.

Ms. Bezboruah had done her research before the latest financial upheavals, but she said that much of the same wisdom about corporate philanthropy holds true in good times and bad. One factor that appears to be a constant, she said, for example, is how much giving decisions are influenced by the personal interests and connections of a company’s top managers.

“The lesson there for nonprofit organizations,” she said, “is to develop relationships with people in the corporate world.”

******* Charities counting on bequests promised by donors before they die beware: More often than not those gifts never come through.

That’s the message Russell N. James III, an assistant professor at the University of Georgia and a former fund raiser, shared with conference goers here.

Extracting data from a much larger University of Michigan survey, Mr. James examined information on nearly 300 estates of people who had promised before they died to leave a charitable bequest. Only in 41 percent of those cases, though, Mr. James found, did that gift actually come to fruition after the would-be donor died.

Among the more-common reasons for the gift never materializing, said Mr. James, a lawyer, is that the will never went to probate or the would-be donors change their minds and revoked the bequest when they had more children or grandchildren.

Mr. James’ goal is to create a chart or formula of some kind that fund raisers could use to assess the likelihood of a charity ever collecting on bequests.

“So you would have the variables — age of donor, number of children, whether they have a will or a living trust, etc. — and you would look on a chart and see if the gift will likely come in and what it might be worth,” Mr. James said.

One factor such a chart may not be able to take into account, a conference participant noted, however, is whether donors are telling the truth about their intentions to give after death.

The participant, from a Virginia university, said she sits on the board of an arts organization that recently was stiffed on an expected bequest by a 102-year-old donor, who had been a loyal and generous annual contributor.

“She had even joined the legacy society,” said the participant. “It was a big surprise to us when she passed away. We were not named.”

******* Charities unable to attract a celebrity spokesman to their cause need not despair, Robert Wheeler from California State University at Fullerton, told conference goers here.

In a study gauging people’s reactions to a print advertisement for a charity, he found that the version of the ad that included a photograph of a stately looking building elicited a similar response to versions of the same ad that featured pictures of celebrities.

Mr. Wheeler said that celebrities may help attract attention to a cause and raise awareness quickly. Beyond that, he said, his research so far demonstrates that nonprofit organizations would have other effective ways to convey important messages of credibility and expertise.

“We see all kinds of images working in for-profit advertising, like the rock as the symbol of Prudential,” Mr. Wheeler said. “If there’s not a celebrity for your cause, you can find something else that helps capture the essence of what you are trying to convey.”

******* It was back to the future when Gary M. Grobman, an author of a number of books on nonprofit fund raising and management, addressed a session at the conference of researchers here.

Mr. Grobman gamely shared what he had identified as emerging trends among nonprofit organizations at the researchers’ annual gathering in 2004, and he graded himself on his predictions.

He earned what he called “a gentleman’s C.”

One area where he really got it wrong, he said, was with regard to the impact of American’s fear of terrorism. Only three years had passed from the September 11 terrorist attacks when he predicted that more people would be staying home, shunning meetings and fund-raising events; more charities would engage in virtual activities, like online board meeting; and charities would spend more and more money to improve the security of their offices and computers systems.

Now, four years later, people are staying home more, he said, but that’s more because of the economy than fear of terrorism; and charities are indeed doing much more online, but that’s mainly because the technology has improved and become more affordable.

“I really blew it on that one,” Mr. Grobman said. “The hype of terrorism, the threat of it, or the way people see the threat has totally diminished and hasn’t had near the impact on behavior and decision-making as I had once thought.”

As for a bold prediction he may be able to revisit at the research association’s 2012 conference?

“It would not surprise me that if four years from now the amount of private donations will be approximately $300-billion a year – the amount it is today. But the problems the $300-billion will be meant to address will be much more magnified than they are today.

“That’s my worry, so I hope I am wrong.”