I’m not much of a television viewer these days, other than sports and news, and probably would have missed NBC’s The Philanthropist it if it hadn’t been for the kerfuffle caused by the Council on Foundations. In late June, the COF came out with a statement saying in part: "[THE NBC prime-time program]The Philanthropist is to charitable giving as The Pink Panther is to police work. The show is a romanticized, action/adventure depiction of a powerful businessman’s efforts to find meaning in his life by applying his fortune and acumen to the problems of struggling communities in developing countries. … While some elements may ring true, very little of the first episode conveys the realities of philanthropy." (Read the entire statement here.)

This statement generated a flood of comments. In his blog, Sean Stannard-Stockton gave a spirited defense of having fun while doing good work at the same time. Bill Schambra blasted the COF—and much of organized philanthropy for that matter—in a Chronicle of Philanthropy piece, saying, "American philanthropy can heap contempt upon The Philanthropist’s short-sighted, sentimentalized, amateurish understanding of charity. Or philanthropy can pause long enough to consider that, in its determined and single-minded drive toward professionalization, it may in fact be systematically cutting itself off from its own deepest wellsprings." (Read his review here.)

Last week, Schambra and the Hudson Institute hosted another of their interesting debates, this time on The Philanthropist. Guests included Sean Stannard-Stockton, Ian Wilhelm from the Chronicle, and Steve Gunderson from COF. (A video and recording of the session will soon be posted on the Hudson Institute site.)

Another guest was Tom Fontana, writer and executive producer for The Philanthropist. He has a long list of creative credentials and awards, including writing and producing for the television series St. Elsewhere, Homicide: Life on the Street, and Oz. Fontana’s ambitions are simple: make interesting television programs that generate ratings. Stuck in a 10 o’clock time slot in the middle of the summer, a recent Philanthropist episode had 5.5 million viewers, which is a lot of people by philanthropy standards.

Fontana’s style is to use real-life experiences—from doctors, detectives, and jailers—to hang his plots. So I think it’s pretty interesting that he would think the adventures of a freelance philanthropist would be sufficiently entertaining for a television action series. It should make those of us hard at work in the nonprofit sector proud to know our field is seen as exciting! And it underscores the rising popularity and social acceptability of charitable giving, which is good for both our work and the people we serve.

By the way, I asked Fontana why he selected the title The Philanthropist, since most Americans who donate to charity and volunteer probably don’t have a clue as to what that word means. Fontana said he didn’t really know, but the producers certainly didn’t test it before they decided to use it. I wonder if the ratings would have been higher if they had chosen a different title?

The panel discussion got bogged down for a while debating the distinction between charity—giving from the heart like The Philanthropist does—and what professional grantmaking does—what we today call philanthropy—focused on research and outcome measurement.

We can all get bogged down if we’re not careful. In the end, The Philanthropist reminds us that most charitable giving is motivated by a variety of reasons, priorities, and values. That’s what makes American generosity so special, and that’s why we need to be careful not to expect all giving to be driven by evaluation and analysis. Come to think of it, that advice may be useful when watching an action-packed TV program as well. This one just happens to touch on a subject that’s near and dear to our hearts.

Quick! What are the largest sources of revenue for nonprofit organizations? The public usually thinks the right answer is charitable giving, and this is certainly where most of the attention goes. But according to the Urban Institute’s Nonprofit Almanac 2008, 50 percent comes from fees for services and goods from private sources, and another 29.4  percent comes from government grants and fees for services. That’s nearly 80 percent of all of our revenue! Private contributions account for only a little more than 12 percent.

Through my work with the Nonprofit Data Working Group organized by the Aspen Institute, I saw a February 2009 report from the Government Accountability Office (GAO) to the chairman of the Committee on the Budget, House of Representatives. You can find the report here. The Committee asked the GAO to report on the mechanisms through which federal dollars flow and what is known about federal dollars going to the nonprofit sector.

Tracking this money is not easy. For example, in fiscal year 2006, grants were provided to nonprofit organizations directly under almost 700 different programs. But grants and contracts also reach nonprofit organizations through intermediaries at various levels of government. Money also flows to nonprofits through fees for services in an even more complex path, particularly when it comes to health-related services. Other monies flow through loans, loan guarantees, and tax policies.

The report states that "due to limitations and reliability concerns with tracking systems’ data, the funding data presently available leave policy makers without a complete, accurate understanding of the amount of funding flowing to these key partners." That’s a nice way of saying it’s nearly impossible to know what’s happening given existing systems and processes. Despite these limitations, the GAO estimates that in fiscal year 2006 the following federal funds flowed to nonprofits:

• $145 billion in fee-for-service payments, mostly through Medicare
• Approximately $25 billion in direct grants
• About $55 billion in grants that flowed through states
• Approximately $10 billion in contracts
• Approximately $450 million in outstanding direct loans and $2.5 billion in loan guarantees

The report concludes that the opportunity to get to understand the nonprofit sector is "being missed, in part, because of the absence of complete and accurate data on federal funding reaching recipients of different types. … As a result, the extent of the federal government’s dependence on various sectors for delivering services also is unknown."

I hope this report is a wake-up call not only for the federal government but to leaders in the nonprofit sector as well. We need to do more to get government decision makers, in both the executive and legislative branches, to understand better and appreciate the essential role the nonprofit sector plays in American society and how essential we are to supplying vital social services. Why wasn’t the nonprofit sector a major focus of the stimulus package? What can the Social Innovation Fund do to get us on the path to strengthening this vital partnership?

I usually focus on the "benefit" side of philanthropy—what can we do and how we can make sure our efforts have the greatest impact. That’s why I have so much interest in measuring the effectiveness of nonprofits—how can nonprofits get better and serve more people?

But what "obligations" do funders have? That was the subject of another interesting and provocative discussion last Friday, sponsored by the Bradley Center for Philanthropy and Civic Renewal in Washington, D.C., and moderated by Bill Schambra, the Center’s director. You’ll soon be able to read a transcript of the event. The event was also the occasion for the release of a new report funded by the Philanthropy Roundtable and written by Evelyn Brody and John Tyler. You can get a copy of the report here. It is an interesting monograph worth reading.

The subject of the debate was the seemingly simple question "[are] philanthropic assets public money" and therefore subject to government and public oversight and/or controls? The monograph lays out three ways this argument is made: 1) philanthropies have public rather than private purposes and are subject to broad government oversight; 2) because philanthropies exist under state charters they are "quasi-public" bodies; and 3) since governments forgo tax revenue, the assets of charities are public money, or as some have been saying, a giant earmark. Should they be considered exemptions, subsidies, or passive subsidies?

Presenters on Friday were monograph co-author John Tyler, general counsel of the Ewing Marion Kauffman Foundation; Glenn Lammi of the Washington Legal Foundation; Ray Madoff of Boston College School of Law; and Ralph Smith from the Annie E. Casey Foundation (and also chairman of the Council of Foundations). Both Tyler and Lammi made strong arguments that the federal and state governments were trying to impose inappropriate controls on philanthropy. Adam Meyerson and Sue Santa from the Philanthropy Roundtable argue in the introduction to the monograph that "such changes could significantly affect the ability of philanthropies to continue to play their role in supporting and nourishing American pluralism." Madoff and Smith pushed back. Madoff pointed out that even private entities have stakeholder obligations and the need to show public good. It seems reasonable for society to ask if there is appropriate oversight and whether we are getting what we need from these institutions.

I felt uncomfortable as the debate drifted more toward charges of government over-reaching. I personally don’t see this as one of the bigger threats to philanthropy at the moment, compared to the problems of personal benefit and general sector ineffectiveness. Smith clarified this issue for me when he observed that the debate was mixing the term government with public. I am comfortable with the notion that philanthropic institutions have a "social contract" with society with certain privileges and obligations. The monograph makes a more narrow point: "Our analysis does not defend philanthropies from government involvement by saying, ‘You can’t do this to us.’ Instead, it says, … ‘You can’t do this to us on grounds that our assets are public.’ … proponents of increased government or public mandates must put forth other grounds for imposing on the purposes, structure, and operations of foundations and other charities."

We’ll be hearing more about this issue. My thanks to the Hudson Institute and the Philanthropy Roundtable for raising it.

What do you make of the news from Giving USA about the drop in revenues for the nonprofit sector for 2008? Sean Stannard-Stockton in his blog, Tactical Philanthropy, asks whether we should call the glass half full or half empty: "Charitable Giving Exceeds $300 Billion. Second Highest Level of Giving Ever!" or "Charitable Giving Falls Dramatically. Largest Percentage Drop on Record!"

My personal take is that the 2008 results are not surprising, but that they do not bode well for 2009.

Here’s what I think happened. Although charitable giving slowed through the first nine months of 2008 (see the results of our 2008 nonprofit economic survey, which covered January-September), it looked as if we were on our way to another year-to-year increase, just as philanthropic giving has done almost every year over the last 50 years or so. When the financial crisis hit in the fall, many donors continued to do what they had already planned for the year (particularly large foundations). Other donors, concerned about the increase in demand for social services and the plight of nonprofits, dug a little deeper and either matched their previous contributions or gave a little more. Some foundations even went above their 5 percent payouts. As a result, 2008 didn’t turn out so bad. A little less than the previous year, but by no means a disaster. It was, after all, only the second year in history that charitable giving exceeded $300 billion, which is an extraordinary confirmation of the generosity of Americans.

I think, however, that these results mean 2009 will be even tougher. The "uniqueness" of the economic crisis is beyond us. We’ve come to the realization that it is here to stay and that it will be long and difficult. Foundation endowments are down 20 to 40 percent, and it will take a long time to rebuild them, certainly not in a single year. As a result, foundations are hunkering down, cutting both payouts and expenses. There will be less willingness to break the "5 percent ceiling" this year. Many individuals are concerned about their personal situations, with compensation flat to declining, the job picture uncertain, and retirement plans in shambles. The stock market—generally one of the most important indicators of giving—is still sputtering. All of this means that charitable giving will take a major hit in 2009, probably the worst we have ever seen.

Here’s one way to think about it: total giving to charity has been remarkably consistent over the years, hovering slightly above 2 percent of GDP. (It declined from 2.3 in 2007 to 2.2 in 2008.). Predictions for GDP in 2009 are currently ranging from a decline of 2 percent to over 6 percent for the year. I checked with Patrick Rooney, recently appointed (congratulations Patrick!) as the new executive director of the Center on Philanthropy at Indiana University, about this back-of-the-envelope predictor of giving. Patrick told me it is in the ballpark, but cautioned that "GDP … and the sources of giving … [are] a function of many variables and sometimes they all move in same direction but usually not."

From another perspective, Susan Raymond, writing on onPhilanthropy, argues that "when unemployment goes up, individual giving goes down. When unemployment goes down, individual giving goes up. Unemployment is now at about 9.5%, and 25% of the unemployed have been without jobs for at least 27 months."

Any way you look at it, all of us in the nonprofit sector need to prepare ourselves for a year with no increases in revenue and most likely a decline in total giving. It will be an environment that requires us to be smarter, more efficient, and more focused on what really matters. We’re currently conducting a mid-year nonprofit economic survey; we’ll be releasing the results in July. Stay tuned.

Last week I spent several days in Columbus, Ohio, at the DonorEdge 2.0 conference. You can find out more about the conference here. DonorEdge is a partnership between GuideStar and a growing number of community foundations committed to the proposition that, armed with better data and tools, donors will make better decisions and nonprofits will be more effective and efficient. Laura McKnight from the Greater Kansas City Foundation blogged about the conference, and we have more information on DonorEdge on the GuideStar site.

Community foundations find themselves at an interesting inflection point. Their model is in flux, and what worked in an earlier era of philanthropy is not working as well today. In his introductory comments, Columbus Foundation president Doug Kridler said foundations need to speed up the transformation of their roles and business models. He likened the community foundation situation to the old question about railroads: are we about trains or transportation?

Members of the DonorEdge community don’t seem to be waiting for the picture to clear but are pushing ahead, harnessing technology to help create new business models that rely on cutting-edge technology to connect with people in new ways. Kridler and his DonorEdge colleagues see themselves as being at the hub of their communities, both literally and virtually—acting as the connectors between a variety of professional and individual donors and the needs and interests of their nonprofit communities. More like a "community knowledge specialist."

I like the fact that community foundations get to see and touch donors up close in practical ways, often managing hundreds of donor-advised funds, as well as working with most of the private foundations in their communities. So much talk today is theoretical about the "needs of the donor." Community foundations actually meet with them and learn about what they need. Now they are using DonorEdge as a platform to create an interactive giving and research tool. In several discussions, Mark Brewer, president and CEO of the Community Foundation of Central Florida, shared how he and his colleagues are using DonorEdge to transform the foundation’s work, in part because of fascinating research he has done in understanding how different generations are donating to charity differently and how they are using technology in different ways.

Lucy Bernholz gave a provocative opening speech at the conference that worked neatly to remind the community foundations about what it takes to be successful connectors. You can read her comments on the conference here and see her presentation here. She reminded us that connecting to others really can’t happen unless we pay attention to the individual links that create our communities:

• Demographics matter
• Groups matter
• Ownership matters
• Mobility matters
• Forms matter
• Markets matter
• Alignment matters

I liked her recent blog on "ecosystems" even more. She predicts that the "landscape for philanthropic giving—the structures and tools that donors use to organize, aggregate, learn, give, and bank (literally) their philanthropic financial resources will change yet again." I think she’s right. Which is why I plan to spend a lot of my time with the presidents of the community foundations. They are leaders in helping to create the next model.

P.S. There was one amusing moment at the conference. Matthew Bishop, co-author of Philanthrocapitalism and New York bureau chief for the Economist, was talking about his book and the growing trend for more data on which to make decisions. "Just last week in London," he said, "the president of GuideStar said the charity ratings offered by his organization are invalid and harmful to the sector." There was an uneasy silence in the room until Doug Kridler, president of the Columbus Community Foundation, blurted out, "Did you mean to say Charity Navigator?" A blushing Bishop admitted that was what he had meant. Afterwards, I had a chance to introduce myself and we have agreed to get together soon. I hope I can convince him to do a guest blog for us.

How would you have answered this call?

Yesterday I received a call from a reporter at ABC News. He had received a rumor that a meeting had taken place in New York City with Bill Gates, Warren Buffet, Oprah Winfrey, George Soros and Ted Turner and other wealthy philanthropists. None of the participants had put the meeting on their public schedules, but the reporter had confirmed with several of the participants that the meeting had taken place. The subject of the meeting, he said, was philanthropy.

What did I think of this meeting, asked the reporter? And what did they talk about?

First, I said, I have absolutely no idea. No one asked my advice.

Second, I opined, this is important to the world of philanthropy. These are major players, with major bank accounts, and they are living donors—as opposed to large foundation bureaucracies, and they therefore have the power to take action immediately.

So what would they talk about? I said I didn’t know. Other than their general commitment to engaged philanthropy, they don’t have much in common as far as I know. They have all marked out their own special areas of interest. Maybe they have identified a project they can all support. Or maybe it has to do with the nonprofit sector in general. We are in a time where contributions to charities are declining and demand for social services are at an all-time high. Moreover, credit is very tight and cash flow is a problem for many nonprofits.

What would you have said if the ABC producer had called you?