Top Ten: Most Innovative Ideas and Interesting Headlines of 2008
2008 was a year of ups and downs for
almost every sector; however, a number of nonprofit, social enterprise,
and philanthropic organizations demonstrated tremendous innovation in
2008, while others stimulated intriguing headlines. Below is a sampling
of some of the most innovative ideas and interesting headlines of the
last year.
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Innovative IPO
“Initial Partnership Offering” Fundraising Strategy Increases in
Prevalence
In
2008,
Do Something, a not for profit
organization with a mission to inspire, support, and celebrate teenagers
who want to get involved in causes such as the environment, HIV and
sexuality, and poverty, launched a philanthropic type of initial public
offering called an "initial partnership offering" (IPO), with the goal
of raising $8 million to double the organization’s activities by 2011,
when it hopes to be engaging with 66 percent - 21 million - of
America’s teenagers. Prior to Do Something’s IPO,
Year Up, an
organization dedicated to helping young adults gain professional skills
and entry-level employment, also developed their own IPO working with
the
Nonprofit Finance Fund, in an effort to
raise $18 million to cover operating deficits as it doubled its number
of sites.
As a
September 2008
article
in the Economist noted, these innovative IPOs highlight the trend
of nonprofit
organizations looking to “philanthropic equity” to fund their
activities. It is estimated that nonprofits have raised $200 million of
this type of funding in the past few years, with an additional $100
million currently being sought.
Here's how Do Something’s IPO worked (from a September 21, 2008,
article written by Chief Executive
Nancy Lublin):
-
80
shares were available at $100,000 each, which a “shareholder”
directly paid or raised from others. The amount was payable six
months from the date the shareholder agreement was signed.
-
The
shares were purely philanthropic in nature. By law, they did not
represent a commercial interest in Do Something.
Ten shares
were purchased before the IPO even launched.
-
The IRS Redesigns
the Tax Form 990
After reviewing over 700 public comment letters and emails and
reflecting on input regarding changes to the Form 990 from nonprofit
leaders, experts and state regulators, the IRS has updated the form as
of tax year 2008 to make it more useful. According to the IRS website,
changes were made in the formatting and content of the form. Changes
from the 2007 form include a front page summary providing a snapshot of
key financial and operating information, a new governance section, and
revised compensation and related organization reporting. Additional
schedules have also been included to collect information not previously
required. Overall, the redesign is aimed at enhancing transparency of an
organization’s mission, financial information, and operations and
promotes tax compliance by improving table formats, making it easier to
understand what to report and how to report it. For more information,
visit the
IRS website.
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Aspen Institute
Provides Guidance to Public Policymakers on Strengthening the
Nonprofit Sector
The Nonprofit Sector and Philanthropy Program of the
Aspen Institute reported on suggestions
from nonprofit leaders to improve government policies regarding
nonprofits. The 10 proposals included in the report, titled "10
Nonprofit Policy Proposals to Strengthen U.S. Communities,"
highlight areas in which a bipartisan commission could develop public
policies that would improve the government-nonprofit relationship and
the nonprofit sector’s ability to do its work:
1.
Generate growth capital for promising nonprofits by creating a
Social
Investment Fund
Network.
2.
Promote the growth of enterprises
that mix business practices with social missions by creating a special
tax code designation for social-benefit enterprises.
3.
Increase donations by extending the
deadline to April 15 for making tax-deductible charitable contributions.
4.
Increase the funds available to
nonprofits by simplifying or reducing the excise tax for private
foundations.
5.
Improve the viability of smaller
nonprofits by creating a Small Business Administration for nonprofits.
6.
Advance knowledge and improve the performance of nonprofits and
philanthropy by creating a
Strategic
Nonprofit
Research
Collaborative
to support independent analysis of nonprofit data, issues and
challenges.
7.
Improve disaster relief, especially
for low-income and vulnerable people, by integrating local nonprofits
and faith-based groups into official response systems.
8.
Ensure strong nonprofits by
recruiting, training, and retaining the next generation of leaders for
the nonprofit sector.
9.
Encourage
public service by making a “Summer of Service” a rite of passage for
every young person during the transition from middle school to high
school.
10.
Encourage the use of music as a development tool
by creating a Music National Service Initiative, strengthening and
expanding music-based public service.
To learn more about these proposals,
click here.
-
Social Enterprises
and Entrepreneurs Alike Make Strides With Wiki Technology
Organizations are increasingly using new Internet tools to share
information easily with a geographically dispersed staff and to allow
large, discrete communities to connect with each other. Web 2.0 tools,
in particular Wiki technology, are allowing organizations with field
staffs not only to share information quickly but also to collaborate as
members of a community. For example,
Kiva, a micro-lending organization
working to empower individuals to alleviate poverty, utilizes
field-based Fellows to collect information from its loan recipients
around the world, and then share those learnings with other
geographically dispersed Fellows. To facilitate this, Kiva has created a
Wiki that is used as an online workbook by its Fellows. Fellows add
information they are retrieving from the field into the Wiki, which is
then read and edited by other field staff. This allows Fellows around
the world to learn about what other Fellows are doing, pose questions,
and share information. Additionally, Wiki is being used to start new
social enterprises, including
PatientsLikeMe.com, in which patients
suffering from various diseases can form a community and communicate
with one another. Click
here for more information on the use of
Wiki Technology.
-
Nonprofit Finance
Fund Receives $50 Million in Tax Credits
The
Nonprofit Finance Fund (NFF), a leading
community development financial institution providing loans and direct
advisory services for nonprofits, was awarded $50 million in New Markets
Tax Credits (NMTC) from the U.S. Treasury in winter 2008. The New
Markets Tax Credit Program, as defined on the Community Development
Financial Institutions Fund
website, permits taxpayers interested
in investing in their communities the opportunity to receive a credit
against federal income taxes for making qualified equity investments in
designated Community Development Entities (CDEs). In order to be
designated as a CDE, an organization must be a legally established
entity with a mission of serving, or providing investment capital for,
low-income communities or low-income persons, and maintain
accountability to the low income residents it serves. A tax credit is a
dollar for dollar reduction, which is subtracted from a taxpayer’s tax
liability. This is different from a deduction, which is an expense or an
amount of money which lowers your taxable income.
The CDE must then use all qualified equity investments to
make investments in low-income communities.
The NFF will use the tax credit allocation to attract private capital,
which it will then use to make loans at reasonable rates to nonprofits
with projects aimed at improving low-income communities. The loans will
be available for community facility projects over $5 million, which may
include new construction or renovations on community health centers,
charter schools, or arts and cultural spaces, to name a few. To find
out more about NFF’s New Markets Tax Credits Program, visit its
website.
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Charitable Gift
Cards Go Mainstream as Innovative Fundraising Strategy
Social enterprises and philanthropies
alike are using prepaid gift cards to raise money for charity. One of
these social enterprises is
Giving Tree LLC,
a privately held for-profit social enterprise in the prepaid card market
with a mission to bring philanthropy to the masses. Giving Tree LLC uses
a prepaid VISAŽ gift card, called the GiveCardŽ, to make it easy for
people to give. The GiveCardŽ allocates 10 percent of the value of each
card to any of over 1 million charities of the holder's choosing,
providing the opportunity for an everyday person to become a
philanthropist. The remaining 90 percent is used like cash. During the
2008 holiday season, Giving Tree created co-branded versions of the
GiveCardŽ with AmeriCorps Alums, CancerCare, Central Dallas Ministries,
and EarthCorps, which the charities sold to their supporters in an
effort to raise additional money. Affiliates directly received the
donations from the sales of their branded cards. Other organizations
like
Network for Good,
an organization with a mission to simplify individual’s ability to
donate and volunteer online, and
The Greater Kansas City Community Foundation
also offer charitable gift cards, called the Good Card and the Giving
Card, respectively. Unlike Giving Tree LLC’s GiveCardŽ, however, 100
percent of the value of these cards go to the charity of the recipient’s
choice, versus 10 percent.
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PowerPhilanthropy
Connects 400 Central Ohio Nonprofit Organizations to Donors Online
The Columbus Foundation
pioneered a new online giving resource in February 2008 called
PowerPhilanthropy, connecting central Ohio nonprofit organizations with
potential donors. Nonprofits interested in being included provide
information on their organization and activities through the online
Nonprofit Toolkit located on the Foundation’s website. Potential donors
search the PowerPhilanthropy database and read profiles of nonprofits in
their community, which include information on their programs, finances,
management, and services. Access to this information improves donors'
understanding of the organization and helps them decide where to give.
In March 2008 the foundation held a PowerPhilanthropy “matching”
fundraiser, in which it matched the contributions. The fundraiser lasted
until the Foundation’s $250,000 in funds was used up, which took 44
minutes.
Read press releases on the fundraiser - Press release
#1 and
#2.
-
Case Foundation
Giving Challenge
Uses Technology to Raise $1.7 Million in 50 Days
The
Case Foundation,
Causes on Facebook, and
PARADE magazine’s two fundraising
initiatives, “America’s Giving Challenge” and “Causes Giving Challenge,”
used online social networking tools to raise $1.7 million in under just
two months. The Causes Giving Challenge allowed Facebook members to
activate social networks, while the America’s Giving Challenge used
online charity "badges" placed on personal websites, within e-mails, and
on social networking sites to promote causes and raise money. The
challenges awarded cash prizes for the causes supported by the
“champions” who were most successful in using these tools to gain
support for their cause.
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Dan
Pallotta’s New Book Challenges the Giving Community to Reflect on
Limitations Placed on Nonprofits
Dan Pallotta, President of Springboard, an organization that designs
brand identities and marketing campaigns for nonprofit and social change
organizations, has written a book called Uncharitable: How
Restraints on Nonprofits Undermine Their Potential, which
challenges long-held notions about nonprofits. Should donors stop
focusing on how much it costs nonprofit groups to raise money? Should a
nonprofit offer its "investors" the opportunity for a financial return?
Should it spend money on advertising? The author says yes to all three.
The book asks the giving community to grant nonprofits the freedom to
“get the job done,” giving nonprofits the same autonomy that businesses
have to advertise, take risks, provide competitive salaries, and earn a
profit. Whether or not you agree with the book’s premise, Uncharitable
is challenging the giving sectors’ beliefs on the best
way for nonprofits to achieve their outcomes.
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Platte River
Industries Group Launches a ServiceMaster Clean Franchise, Its
Second Social Franchise Business
The nonprofit
Platte River Industries, of Denver,
which is dedicated to creating market-based employment opportunities for
people with disabilities, opened a ServiceMaster Clean franchise in
2008. ServiceMaster Clean provides residential and commercial cleaning
services. The opening of the social franchise highlights the trend of
franchisors becoming increasingly interested in partnering with a
nonprofit organization. According to an interview with the president and
vice president of the ServiceMaster Clean franchise brand, published in
Streams of Hope – Social Franchising: A New Path
to Wealth for Nonprofits, franchisers are looking to
partner with nonprofits that can enhance the brand, have the capacity to
meet performance responsibilities, and will provide the customer care
necessary to sustain the brand.
In
addition to the ServiceMaster Clean franchise, Platte River Industries
operates Auntie Anne’s pretzel shop franchises at four locations in
Colorado, earning between $200,000 and $1million in annual revenue per
site.
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