Über die Autorin bzw. den Autor

LUCY BERNHOLZ, PhD, is the founder and President of Blueprint Research & Design, a strategy consulting firm specializing in program research and design for philanthropic foundations. As a noted analyst of the philanthropic industry, she has published numerous articles in the trade and general press, and edited many collections and scholarly journals. A portion of the income from the sales of this book will be dedicated to the Blueprint Research & Design corporate giving program. www.blueprintrd.com

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"Lucy Bernholz is one of the leading thinkers on the present and future course of philanthropy. Her writings are always a step ahead of the rest, and this book is no exception. Her thoughts and analysis on the philanthropic sector, where it is headed, and what is required from leaders like us, are both timely and visionary. She urges us to reimagine ourselves as an industry and identifies the practical steps we can take as donors and foundations to build philanthropic capital markets that will help us achieve our social missions."
Alexa Cortes Culwell, CEO, Charles and Helen Schwab Foundation

"Now that all the philanthropic hype of the late 90s has died down, what are the true, key trends for the future? What really matters? Bernholz articulately identifies the vital issues we all must focus on if we are going to capitalize on those trends and optimize philanthropy s future."
Paul Shoemaker, Director, Social Venture Partners, Seattle

"Lucy Bernholz combines the rigor of a trained scholar with the street smarts of an experienced practitioner. This combination makes her an indispensable guide to the philanthropic marketplace. Creating Philanthropic Capital Markets provides her most provocative theories and visions, and therefore is a must read for anyone who wants to understand, influence, or participate effectively in what she calls the new era of commercial charity."
Katherine Fulton, Partner, Global Business Network and the Monitor Group

"Business success relies on networks why would philanthropy be any different? Lucy Bernholz has charted how families and individuals are building giving portfolios by using multiple products and services within the philanthropic sector. She also challenges the philanthropic service sector to evolve to best serve these donors and communities. For people just getting started in giving and for those already involved this analysis provides practical insights into how to get the greatest results from their philanthropy."
Jeff Shields, Vice President, U.S. Trust Company

"Lucy Bernholz s newest book is a lively and engaging exploration of the dynamic new philanthropy industry in America. It functions as a kind of charitable GPS , guiding the reader across the fascinating, varied, and shifting terrain of twenty-first-century charitable giving. But, more importantly, it offers a well-conceived blueprint of new ways that private charitable resources can and should be better leveraged for greater effectiveness and impact in the public benefit sector."
Peter Hero, President, Community Foundation Silicon Valley

Aus dem Klappentext

Every year, individuals and families in America give more than $200 billion to support nonprofit activity ranging from tithing to their churches to multimillion-dollar endowments. The strength of American philanthropy is its diversity and personal nature. Its weakness is its dispersed size and diminishing value in the face of ever-widening gaps in wealth and public revenue shortfalls.

Creating Philanthropic Capital Markets presents strategies for reimagining philanthropy. It suggests that the resources of individual philanthropic players people and institutions can have a far greater impact, provide far more satisfaction, and contribute to a far better world, if the system of philanthropy as a whole is redesigned.

This volume s broad perspective draws from a variety of works on organizational change in philanthropy that pulls together ongoing but disconnected efforts within philanthropy to demonstrate a singular approach to enact change in the industry.

Through a coherent framework for pursuing such far-ranging changes, this easy-to-understand book addresses new ways for individuals and organizations to invest grant funds, approach regulatory structures that guide giving, and define their goals, activities, outcomes, and achievements. Many of the ideas presented here are currently practiced in small or in limited ways.

The author brings together more than a decade s worth of real-life insight as a program officer or consultant to many foundations, and applies basic principles of industrial theory and evolution to examine, with a trained scholar s eye, how individual organizations, associations, and the philanthropic infrastructure can work more effectively.

Complete with many informative tables and graphs, Creating Philanthropic Capital Markets is an enlightening and inspiring volume for everyone working in philanthropy: professional advisors, tax attorneys, financial planners, financial service firms, and estate planners and accountants who serve high-net-worth individuals.

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Creating Philanthropic Capital Markets

John Wiley & Sons

Chapter One

The sweat of industry would dry and die But for the end it works to. -William Shakespeare, Cymbeline

Philanthropy-at its most basic-is the process of sharing private resources for public benefit. The activities it encompasses range from volunteering time to strategically investing endowed resources in socially responsible index funds to giving time and money together. All of these activities involve "putting something in" to make something better "come out." This can be expressed as an incredibly simple equation:

philanthropic inputs + existing conditions = better outcomes for others

This deliberate oversimplification is important in helping us locate the industrial elements of philanthropy. The equation in its entirety, including the final sum-"better outcomes"-captures both the public purpose of the industry and the extent to which philanthropy is part of its surroundings ("existing conditions"). Philanthropic actions are not about profit or outcomes for the giver, but are actions taken in pursuit of something for others. This public purpose distinguishes philanthropy from other industries and greatly influences the manner in which key components of the industry interact.

The industrial framework applies most specifically to the equation's "philanthropic inputs" variable. While the two most basic forms of input are time and money, applying the industrial lens allows us to see the magnitude of the changing forms, functions, participants, activities, and scope of these inputs. Industries are defined as a set of companies that produce highly substitutable products or services. All financial vehicles for making tax-deductible contributions fall into the philanthropic industry, from charitable gift funds to independent foundations, private banks, corporate giving programs, and social donor networks. Each of these vehicles has a unique set of characteristics from the perspective of tax and estate planning, yet they are all firms or products for the purpose of giving away money. Understanding philanthropy as an industry is an effective aid in better seeing what it is uniquely capable of and what it stands no chance of accomplishing.

Applying an industrial framework to philanthropy is not a futuristic definitional trick, it simply recognizes the changes that have already occurred. The components of an industry, which are detailed as follows, now permeate philanthropy. The market and regulatory forces that shape this industry (and are discussed in Chapters 3 and 4) are profound. They will not disappear simply because many in the industry are uncomfortable with the language I use to describe them or because of some idealistic image of what the nonprofit sector should be.

Pointing out the industrial nature of philanthropy is both an act of accepting the real pressures of markets and regulation and positioning the industry to reclaim control of its future. There has long been a robust debate within nonprofits and philanthropy about what to call the work, some prefer "nonprofit," others like "public benefit," and the 1960s brought us the "independent sector," by which to distinguish the work from government or business enterprises. In contrast, this analysis shows philanthropy and nonprofits as dependent on the public and commercial spheres, especially when the guiding questions are about future directions.

This chapter outlines both the ways in which the industrial framework is useful and the limits of that framework. It also rounds out the conceptual work of the book by presenting components of evolutionary and systems theory that inform the argument.

Defining the Industry

The literature on business is rife with analyses, exhortations, and primers on industry characteristics, growth, and decline. Industries define themselves through trade associations, the government draws some defining lines while investors determine others, and individual businesses are often active in more than one industry. The work of Michael Porter at Harvard University is particularly noteworthy in defining industries and helping us to see how the standard characteristics and pressures are relevant to philanthropy. The six core elements of an industry are listed as follows and described in more detail in the following section:

Capital for investment

Firms, markets, and customers

Products and services

Competition and alliances

Regulation and public policy

Media attention and public awareness

Viewing philanthropy as an industry provides us with a conceptual framework to hold together these disparate pieces. By thinking of philanthropy as an industry, we can track the influence of capital growth, regulation, product differentiation, and markets. We need to push our imaginations beyond the commonly held vision of a purely commercial industry in order to understand the role that the human and social elements of philanthropy play on the overall shape and size of the endeavor. Lacking a common bottom line, philanthropic action is not as linear, predictable, or quantifiable as changes in the oil, biotechnology, or telecommunications industries.

The various elements of philanthropy are neatly defined by these six industry characteristics.

Capital for Investment

Philanthropy is experiencing an explosion of available capital. The financial resources dedicated to philanthropic action have increased multifold in the last decades, topping out at more than $240 billion in gifts and $476 billion in assets in 2001. This growth is the primary reason that there is so much change in philanthropy. The opportunity to manage and/or advise these financial resources has attracted new types of firms to the market, caught the eye of regulators, excited the media, and created an entry-level for market participation that requires much less wealth than was previously feasible.

As more and more people attain a level of wealth at which managing their philanthropy is an option, they are seeking out a wide variety of giving products. They may choose to establish a donor-advised fund at either a commercial or nonprofit organization. They might partner with peers in creating a giving circle. They may simply increase their charitable giving as part of their overall budget and choose not to invest in a specific philanthropic product. They may simultaneously create a family foundation and become more active in their company's giving program. And, as we will see, many people will choose to use several of these giving products all at once. The growth in giving options-some of which look like products (donor-advised funds) and some of which look like firms (private foundations)-allows broader participation in the industry and encourages a new level of competition between products or firms.

While this growth in philanthropic participation is interesting, it is important to note that more people are purchasing philanthropic products and the actual value of their giving is increasing, but the percentage of individual wealth allocated to philanthropy has remained rather steady (ranging between 1.7 and 2.1 percent of personal income) over the last 30 years. This narrow band of giving is surprising if viewed solely through the lens of the market. There has been no lack of effort to grow the market, as evidenced by the dramatic shifts in the types of firms actively involved in philanthropy and the customers and...