Wealth hoarding, tax avoidance, and how nonprofits are complicit

[Image description: A squirrel, looking alert, standing among green blades of some type of plant. I think they’re a squirrel, but I can’t see their tail so can’t really be sure. Either way, this image has nothing to do with the content of this post. It is there to help calm you down while we discuss a serious topic. Image by JoeBreuer of Pixabay.com]

Happy September, everyone. Holy hummus, it’s September! Fellow parents with school-age children, I hope you are doing ok. Hang in there. We’ll make it through this together. When things get tough with virtual schooling, just remember the old adage: “The days are long, but the years are—You better not be playing Minecraft again! Get back to your Zoom class this instant or no media the rest of the day! And you! Those loose fruit snacks you found under the couch are covered with dust! Throw them away, or at least rinse with water before eating!”

I know we all have a lot on our minds, and unfortunately I must add one more thing for us to think about. Three months ago, I wrote “Have nonprofit and philanthropy become and white moderate that Dr. King warned us about?” Since then, I have been grappling with the question of how effective our work is as a sector. Are we actually doing good in the world, or have we tricked ourselves into believing that we are while in reality we’re allowing inequity and injustice to proliferate? The reality is that we’re doing both, and it’s important for us to untangle these dynamics.

Recently, I read the Gilded Giving report by the Institute for Policy Studies. It examines the trends in giving in our sector and what it means. It paints a picture that is not pretty. Here are several points we should pay attention to:

  • Starting in 2010, a bunch of billionaires signed a pledge to give away half their wealth. Since then, their combined wealth has actually doubled. From $376 billion in 2010 to $734 billion as of July 18, 2020.
  • Over the first four months of the pandemic, when everyone has been struggling, the 100 living Pledgers who were billionaires in March actually INCREASED their wealth by $213.6 billion, or 28%, from 758B in March to 972B in July.
  • Small individual giving has been in decline over the past two decades. Between 2000 and 2016, the percentage of households giving to charity has dropped from 66 percent to 53 percent.
  • Large gifts, however, have been increasing. Households making over $1M claimed 33% of all charitable deductions in 2017, up from 12% in 1995.
  • The number of foundations in existence increased by 68% between 2005 and 2019, from 71, 097 to 119,791. During this period, their assets more than doubled, from $551 billion to $1.2 trillion
  • Donor-Advised Funds (DAFs) have grown even more rapidly in number and assets. DAFs have no legal mandate to pay out anything each year. Donors take tax breaks immediately when they transfer their wealth to DAFs, but they are not legally required to actually distribute those funds to nonprofits.
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Nonprofit and philanthropy and our bad habit of “both-siding” inequity and injustice

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Happy Monday, everyone, or as happy as it can be given that it’s 2020 and we’re all likely in a computer simulation run by a sadistic toddler. An announcement before we begin today’s serious post: The Community-Centric Fundraising (CCF) Slack community is growing and now has over 800 members. People are connecting to one another and starting to form local CCF groups across the world. So join, and I hope to see you there!

Speaking of CCF, since the launch of this movement last month, I’ve been getting requests to be on panels or write articles to defend the community-centric approach against folks who hold traditional donor-centered fundraising philosophies and practices. The framing is that there are two sides to this “debate,” with community-centrism being an uppity challenger to traditional practices so it is time to duke it out Mad Max Thunderdome-style (I may have exaggerated a little).

Sorry, I am not interested in these debates. There are no two sides. Traditional donor-centered approaches have revolved around the comfort of white donors and thus have been allowing them to avoid grappling with systemic injustice rooted in slavery, colonization, and capitalistic exploitation of the poor and marginalized that perpetuates wealth and power hoarding among rich mostly white people, which fuels many of the problems we’re trying to fix. Let’s not waste time with back-and-forth over whether that’s true. There is also no argument that this works to bring in funding. In fact, the issue is that it “works” TOO well. But just because something “works,” doesn’t mean it is the ethical thing to do. We need to collectively explore ways to evolve our fundraising practices to be more ethical.

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How philanthropy fails to support its greatest assets, BIPOC leaders, and what it should do about it

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Hi everyone, real quick before I get into today’s topic—since the launching of the Community-Centric-Fundraising movement a month ago, the team in Seattle has been excited but also overwhelmed by the incredible response from you all! Thank you for your patience as we sort out the logistics. More is coming, including a meeting to discuss the creation of local CCF chapters (it’ll likely be on 8/20 at 12pm PT, sign up for the mailing list if you haven’t so we can send you more details).

***

A few months ago, I left my job after being an ED for 13 consecutive years across two organizations. “How does it feel to be retired?” people would ask. “I’m not retired,” I would joke, “I’m Financially Untethered, aka FU!” (This was before the pandemic, when I still had a sense of humor). It was a needed sabbatical, and I was looking forward to recharging by re-watching Avatar: The Last Airbender, Battlestar Galactica, and The Golden Girls.

One day, I got an email from Angie Kim, President & CEO of the Center for Cultural Innovation. “I’m wondering if you have a soft landing? Can our work (www.ambitio-us.org) potentially fund you, give you a business card, and act as a platform so that you continue to be in the field in ways that might work for you?”

Through our conversations over the following months, I got to understand what Angie meant by “soft landing.” This is what conservatives do for their leaders. They provide them with support to ensure that their work continues. If a right-wing pundit gets fired or leaves their position, you can be sure the conservative movement will rally around them, help them get a new job, a slot on Fox News, a post at a research institute, a book deal, a litigation lawyer, a spot on Dancing with the Stars, or whatever. They understand that their most effective leaders are their greatest weapon, so they do everything they can to protect and invest in them and their ideas.

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9 crappy paradoxes that shape nonprofit and philanthropy

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Hi everyone, quick announcement: Please put August 10th at 12:00pm Pacific Time on your calendar for Community-Centric Fundraising’s first town hall meeting. Sign up here and we’ll send you the zoom link. Until then, the (CCF) Hub is designed to provide alternatives to our default white-centric fundraising narratives. It features about three new thought-provoking pieces of content each week, including “How prospect research can help nonprofits become less racist and more inclusive,” “What I Learned from Losing Two Jobs in the Fight for Racial Equity,” “‘You want a director of what now?!’ When orgs that are hiring are too lazy to know what they want,” and the first episode of the Ethical Rainmaker podcast, where CCF Co-Chair Michelle Muri and I talk about fundraising and equity. Check it out!

***

I’ve been spending a lot of time flossing while thinking of how to categorize the challenges in our sector (What, like your quarantine activities are so much more interesting). Many of the stuff we deal with falls under the category of “well-meaning people inadvertently making nonprofits’ jobs harder.” Here are a nine. I’m going to call them paradoxes, though some of these are not paradoxes exactly, but are more like dilemmas, conundrums, or shenanigans. I’ve written about a few of them, but they keep coming up and remain a problem, so it’s good for us to review and have common language to push back. If we want our sector to succeed, we need to be aware of these paradoxes and control for them.

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Toxic intellectualization: How progressives’ addiction to overthinking is sabotaging our work

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Hi everyone, quick announcement: if you are a funder, please join this webinar this Wednesday 7/29 at 1pm ET, led by NDLON and Hispanics in Philanthropy, where you will hear about the impact the pandemic has had on day laborers, domestic workers, and other low-wage earners, the organizations that serve them, and what is needed from funders at this time.

***

About a year ago, I was complaining to my friend Ben Reuler, ED of Seattle Works, about my backyard. I told him how the yard had been cleared the year prior and had just remained a patch of dirt. This was because my spouse and I were indecisive. We didn’t know whether to plant grass seeds, or maybe roll out some turf, try for an ecolawn full of clovers, or possibly hire a landscape designer. We wanted to do some more research. So for 14 months the yard remained barren, save for weeds. The kids refused to play in it except when it rained, then they loved jumping around in the mud. No one complained. We just thought, “We’ll get to it and some point.”

A few weeks later, we invited Ben and his family over for lunch (I make kickass bánh xèo). Ben arrived with a bag of grass seeds, a bag of compost, and a seed spreader thing. “Come on,” he said, “we’re planting grass in your yard.” And just like that, we were out in the yard, sprinkling grass seeds and compost. I was skeptical. Ben is not an expert in lawn care; he is a nonprofit executive director, and everyone knows we EDs have very few useful life skills. Over the next few months, though, as we moved into the rainy season, the grass grew. Now we have a lawn! It’s great for picnics. The children wrestle on the ground. This little yard has been a lifesaver during this pandemic when schools are closed.

Why the heck am I bringing this up? This story is an analogy for a critical weakness in our sector: Our over-intellectualization, tendency to complicate things, gravitation toward research and planning, and avoidance of risk and action. Just like my partner and I hemmed and hawed and was indecisive about what to do about our yard for over a year, we nonprofits and foundations too equivocate and overthink all sorts of things. And gradually, over the years, we start to praise ourselves for doing endless researching, planning, and pontificating instead of taking actions, to the point where we now consider this course of inaction as “best practices.”

This is not to say that we shouldn’t plan or research, but the pendulum has swung too far and it’s become destructive and we don’t even realize it. For instance, I talked to a foundation CEO who asked me to facilitate a discussion about how to better fund Black and Indigenous communities during this time. I told him to just increase payout and give multi-year general operating dollars to Black and Indigenous-led organizations, the end, stop wasting time. Another funder, when I told them something similar about increasing funding to communities-of-color-led orgs, said, “Well, we would love to do that, but we are very white and haven’t really done our inner work yet to be more diverse, so it would feel hypocritical.” So basically communities are suffering because you need months or years to think and reflect and plan and look good to the public.  

Toxic intellectualizing is pervasive across our sector. We have deeply internalized it, overusing concepts like “due diligence” and refrains like “the process is just as important as the results” to justify it. We have built entire industries of data/evaluation and strategic planning consultants around it. We are geared toward planning and thinking because it is safer and less risky to do. The consequences of taking impulsive actions and failing are usually serious in our sector and in society, but we don’t want to seem like we’re not taking any actions, so the middle ground is to think and talk about stuff, and in doing so we continue to waste so much time and resources.

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