November 28, 2002 | Read Time: 6 minutes
Children’s Oncology Services of Illinois receives many visitors at its camp here on the edge of Lake
Geneva each year, but none quite like the two executives from the Philanthropy Group — a kind of investigator-for-hire service for donors who want to know details about a particular charity not found in basic financial statements or charity watchdog reports.
After meeting a few of the 250 campers and taking a guided tour of the wooded camp, where children ages 7 to 20 who have leukemia or cancer stay in July and January, Tim King and Michael T. Green, the founders of the Philanthropy Group, sit in the cafeteria cabin and persistently, but politely, question the nonprofit group’s leaders and staff members on its operations.
Among other questions they ask: What is the racial composition of the charity’s board of directors? How many people have the ability to sign checks for the organization? Who is the nonprofit group grooming to lead it?
The answers to these inquiries — and other observations from the site visit, as well as information gathered from Children’s Oncology Services’ Internal Revenue Service Form 990 and other financial materials — will be included in a so-called King & Green Report, which the company will give to its client, a donor who has hired the company to help him decide whether to support the charity’s $2.5-million capital campaign to expand the camp. (Because its contracts with clients promise confidentiality, the Philanthropy Group declined to provide the donor’s identity or say whether he decided to support the camp.)
The four-page King & Green Reports, which are modeled after Standard & Poor’s business reports, cost donors $1,000 each to commission. The report goes only to the donor who sought it; the charity never sees it.
Business Opportunity
Initial demand for the Philanthropy Group’s services suggests the company may have found an untapped business opportunity within the world of philanthropy. Since the company opened a year ago, its three-person staff has issued 50 King & Green Reports and provided other services to wealthy people and small family foundations, who, in total, give more than $25-million a year to charity, Mr. King says.
Mr. King’s experience as president of Hales Franciscan High School, a nonprofit Catholic boys school in Chicago, prompted him to form the Philanthropy Group. “I came across an awful lot of foundations and high-net-worth individuals who were incredibly generous,” he says, “but who frequently asked questions like, Is there anyone else out there doing work like you’re doing? How do I find out more about different organizations? Or, Tim, I’m thinking of giving to X, what do you know about them?”
Spurred on by Boston College research showing that $41-trillion to $136-trillion will change hands from one generation to the next over the next half century, with $6-trillion possibly going to charity, Mr. King decided he could make money answering wealthy donors’ questions.
So he formed the Philanthropy Group with Mr. Green, his college roommate at Georgetown University and a former director of marketing at Encad, an international company based in San Diego that sells digital printers and related products. Marcia J. Lipetz, who used to run the AIDS Foundation of Chicago, was recruited as well, so that the company had representatives from each of what Mr. King considers the three pillars of philanthropy: nonprofit groups, grant makers, and corporations.
What People Value
The emergence of the Philanthropy Group and its reports is a sign that donors are placing an increasing value on evaluations of charities by third parties, says Jennifer A. Lammers, former director of the New York Philanthropic Advisory Service and now a consultant for the New York Regional Association of Grantmakers. “You would never buy $1,000 worth of shares in a company if you didn’t know its CEO and its performance in the last fiscal year. Today, you wouldn’t write a $1,000 check to a charity without knowing the executive director or what it did last year,” she says.
A King & Green Report provides what its creators call a snapshot of a charity’s efforts, by showing, among other things, how it spends its budget, where it receives its income, what types of challenges it faces, and what its major fund-raising needs are. (For $5,000 or more, the company also provides “Sector Scans” of charitable programs in a certain geographic area, such as programs to help the homeless in Chicago, and other philanthropy-related information.)
While it has mainly worked in the Chicago area, the Philanthropy Group is expanding. “Our priority right now is to become the No. 1 philanthropic-service provider in the Midwest, and then we hope to expand nationally,” Mr. King says.
Jack Ryan, a high-school teacher and former partner at the investment-management company Goldman Sachs, says a King & Green Report about Josephinum High School that he requested gave him peace of mind about his donations to the Chicago school. “I thought I’d better understand what the organization’s prospects are,” Mr. Ryan says. He declined to say how much he has given to the school, but says he donates about $500,000 a year to charity.
Under Scrutiny
While Mr. Ryan and other Philanthropy Group clients may value its services, being a charity placed under the microscope of a King & Green Report can be discomforting, says Diane Mesh, director of the Children’s Oncology Services camp, who met with Mr. King and Mr. Green.
“I felt awkward,” she says. “You’re hoping you give the answers the donor is looking for, yet you never hear.”
Richard N. Cowles, executive director of the Minnesota Charities Review Council, isn’t bothered by the anonymity of the Philanthropy Group’s clients, but says he questions whether the company offers much beyond what donors could receive from the Chicago Better Business Bureau or other groups that provide information about local charities. “It just struck me as a way to make money, which is legitimate. But are they really bringing anything new to the table?” he asks.
In fact, Guidestar, a nonprofit group in Williamsburg, Va., offers an analysis service that looks at many charities across the nation for a cheaper price than the Philanthropy Group charges. The Guidestar service costs $59 for a report on a charity and provides financial information gleaned from Internal Revenue Service Form 990s on 160,000 nonprofit groups. It allows users to compare a charity to groups with similar missions or other nonprofit organizations in a 25-mile radius. Because a growing number of people are asking Guidestar for more analysis of charities, the organization may expand its for-fee services.
But Mr. King counters that the evaluations Guidestar and other nonprofit groups provide are not customized to individual donors’ interests and are not as in-depth as a King & Green Report. “There’s great value in being able to see, touch, feel an organization,” he says. “You can’t do that if you just look at a 990.”
