The Philanthropist’s Toolkit
Urbanite #42 December 07
By: Lionel Foster
By her own admission, 40-year-old Ellicott City native Jennifer Kozak did not come from a family that gave away a lot of money. Born in what was then a rural part of Howard County, she spent her childhood without the convenience of an air conditioner or a clothes dryer. Today she lives in Towson and runs her own graphic design firm, yet even as she and her husband, Steve, make regular contributions to their children’s college funds, they clip coupons and drive a Volvo that’s seen over 200,000 miles.
Because Kozak is not male, wealthy, or retired, hers might not be the profile that springs to mind when you think about what a philanthropist looks like. But she belongs to an organization that has awarded more than $1 million to seventy-seven charities in the Baltimore area.
Kozak is a member of the Baltimore Women’s Giving Circle. The group was formed in 2001 with fifty-two members and now boasts a network of 304 local women. All women are welcome, and while there are no official statistics on the age or occupation of circle members, cochair Lynn Sassin guesses that they range in age from the mid-thirties to mid-seventies and knows members from a diverse range of professions including law, marketing, education, and business.
There are at least four hundred such organizations around the country, all based on a simple structure: Each member makes a donation, which is then pooled to form a fund from which the group can award grants to causes of their choosing.
The Baltimore Women’s Giving Circle members contribute a tax-deductible $1,100 annually, $100 of which goes to cover administrative costs. The rest of the money becomes part of the annual allotment available for disbursement. The circle’s grants committee reviews proposals, conducts site visits, and makes recommendations on which groups should receive funding. There is also a strong social and educational component: The circle regularly invites speakers with firsthand experience in such issues as economic development, the working poor, and the economic health of women.
The rise of the giving circle may be a relatively new philanthropic phenomenon, but the generosity it harnesses is not. In 2006, American households gave a record $295 billion to charity. In 2005, Americans’ individual charitable contributions were equal to 1.7 percent of the country’s GDP—a greater proportion than any nation in the world, according to the UK-based Charities Aid Foundation. (The next closest was Britain, at approximately 0.73 percent.) This giving funds most degree-conferring colleges and universities, 80 percent of which are nonprofit, and 70 percent of American hospitals. Perhaps surprisingly, total contributions from individuals outstrip business contributions by a ratio of seventeen to one.
Of the $222 billion in individual contributions in 2006, the so-called mega-gifts—such as billionaire investor Warren Buffett’s $37 billion donation to the Bill and Melinda Gates Foundation—make the most headlines. But while wealthy people give larger sums, people with the most modest incomes typically match or outdo their wealthy counterparts in terms of how great a proportion of their income they donate. When social scientists graph income on one axis and charitable donation as a percentage of income on the other, it creates a U-shaped curve, with the line falling through the low-to-middle income groups before rising again among the wealthy.
The Baltimore-area nonprofit sector is particularly strong. One of the top thirty U.S. foundations by asset size is in Baltimore City (Annie E. Casey Foundation, $3.3 billion) and a second is in Baltimore County (The Harry and Jeanette Weinberg Foundation, Inc., $2.2 billion). The Maryland Association of Nonprofit Organizations, with offices two blocks east of M&T Bank Stadium, is one of the largest organizations of its kind in the country, providing technical assistance to several hundred nonprofits annually. The Association of Baltimore Area Grantmakers is one of only thirty-two regional grantmaker associations in the country. Baltimore has nearly 4,000 nonprofit organizations—among them, a large number of universities and hospitals—that, in 2005, employed nearly a quarter (23.75 percent) of its workers.
Yet despite the considerable breadth of the nonprofit sector and its donor base, in recent years it became obvious to organizations like the Washington, D.C.-based Forum of Regional Associations of Grantmakers (FRAG) that, because many groups are underrepresented on donor lists, the country was missing out on the impact of potentially billions more in charitable aid. “Almost 100 years ago, wealthy white men like Ford, Carnegie and Rockefeller forged the foundation of organized philanthropy,” the forum states on its website. “The faces of giving changed along with the way they give. Women and people of color are using new ways of giving to get billions of dollars directly where needed.”
In 1998, FRAG, with support from a number of national foundations, invested $14 million in its New Ventures in Philanthropy Initiative, with the goal of promoting giving among underrepresented groups, including women and racial and ethnic minorities. The money and mission of New Ventures shaped forty-one community-giving projects across the country, including the Association of Baltimore Area Grantmakers’ Baltimore Giving Project. The Baltimore Women’s Giving Circle developed from the Baltimore Giving Project’s goal of creating, growing, and sustaining giving circles.
The rapid growth of giving circles—most were founded since 2000—may be due to the fact that they allow different combinations of cultures, institutions, and motivations to complement each other. In many instances, giving circles are one of many charitable investment tools offered by a local community foundation. Charitable foundations take their cues from nineteenth-century industrialists like Andrew Carnegie, who was among the first to found one: They have a board of directors and manage large sums of money, which they distribute in the form of grants. Private foundations do not solicit funds themselves; instead, they distribute money on behalf of a person, family, or corporation. Community foundations are trusted with the cash and assets, donated within a person’s lifetime or as part of the estate, of multiple donors to fund projects within a particular geographic area. While it is not unusual for wealthy families or individuals to endow their own fund within a community foundation in lieu of incurring the costs of establishing their own foundation, giving circles cast a wider net by allowing numerous members with relatively small contributions to, essentially, become co-principals of their own grant-writing fund. “Giving circles definitely represent the democratization of philanthropy,” says Daria Teutonico, director of New Ventures in Philanthropy at FRAG, “but some community foundations use their knowledge of community needs and their knowledge of making grants to help giving circles grow and develop.”
But it’s not just about money. “I was attracted to the idea of meeting a new set of impressive, educated women and learning about a set of needs that I didn’t know about,” says Kozak, who sits on her circle’s grants committee. She and fellow committee members review proposals, conduct site visits, and recommend projects to fund. Like many other new-breed philanthropists, she wants to touch the buildings and talk to the people that her money will support. Her spring months, when the grants committee conducts much of its business, tend to be busy, but she likes the fact that she can step aside if things get too hectic. “You can be as involved as you want to be,” she says, and the work will still go on.
The giving circle concept is also flexible enough to accommodate different cultural nuances. As FRAG notes, “African Americans have always given informally but generously to mutual-aid societies, their churches and members of the community in need.” These totals, like the billions of dollars in remittances flowing from host countries like the United States to migrant workers’ families around the world, haven’t always registered in official charity tallies, but as more minorities shape giving-circle priorities to their own interests and needs, it seems likely that their contributions will receive greater notice.
Another local giving circle exemplifies this potential. Thirty-six-year-old Talib Horne is a founding member of the Change Fund, a group of young, African American professionals, under the umbrella of the Association of Black Charities. Horne’s motivation for becoming involved in a giving circle was deeply personal and developed as a result of his experience living in three different sections of the African diaspora: He was born in Philadelphia, then, from age 7 to 11, lived in Liberia and Swaziland, where his mother worked as a missionary for the National Baptist Convention. “We didn’t have running water, electricity, or anything like that,” he explains of his first two years in Liberia. “I saw extreme poverty there. Some people in America don’t have hope, but they don’t realize how bad it can be.”
Horne moved to Baltimore as a teenager before attending St. Mary’s College in Southern Maryland. Since earning a bachelor of arts degree (with a double major in economics and political science), he’s spent his entire career working for nonprofit organizations, but after several years he questioned whether he was doing enough. The idea of forming a giving circle started as a conversation among friends. “One of the things we asked ourselves was, as young African American professionals, what are we doing to help our community?” he says. “A lot of our initial conversation was about the time we’re putting in, i.e., sitting on boards, working with nonprofit organizations, working with churches, stuff like that. But then we started asking, Is it enough to give time or should we also give some resources? Then we asked ourselves, would it make sense for us just to give resources individually, or to pool our resources together to give more?” Five members started the circle in 2002 with annual deposits of $250. To date they’ve given $6,000 to six nonprofit groups, all with a focus on advancing opportunities for African American and other minority youth in Baltimore.
Even though he’s held leadership positions in nonprofit organizations for the past eight years, Horne credits his involvement with the Change Fund with helping him feel like he was truly making a difference. “There’s a line I always use,” he explains. “‘What you tolerate, you authorize to exist.’ That was our focus. We can’t just sit here and do nothing. We can’t just talk about all the ills in Baltimore. We have to do something about it. That’s what guides me in everything I do.”
—Lionel Foster is Urbanite’s editorial assistant.
Charitable Thoughts
Exploring Different Ways of Giving
Investigate
Giving circles are one way of making your financial contribution go further. Here are two resources that can help you find other outlets.
RealityCharity.com—often called “the eBay of giving”—provides a direct link between you and charitable causes. People and organizations in approximately fifty countries can sign up and solicit donations directly. The site cannot guarantee the legitimacy of any posted cause. Those soliciting funds can volunteer to undergo an identity check, but it is still advisable to do your own homework.
Locally, the Association of Baltimore Area Grantmaker’s website (www.abagmd.org) provides news on philanthropic organizations throughout the state and country, including ABAG executive director Betsy Nelson’s Charitable Giving column, which appears biweekly in the Daily Record.
Know Your Beneficiary
There are a number of tools available for gauging the credibility, viability, and financial strength of a nonprofit organization.
The Internal Revenue Service’s Form 990 is the primary financial reporting form for nonprofit organizations, the equivalent of a corporation’s tax return. Guidestar.com provides access to Form 990 for 1.7 million nonprofits around the country at no cost.
The Maryland Association of Nonprofits (www.marylandnonprofits.org) issues its Seal of Excellence to Maryland not-for-profit organizations that meet fifty-five criteria across eight areas of operation, including governance, disclosure, and financial accountability. Nationally, Charitynavigator.org has developed its own four-star rating system for evaluating more than five thousand of the best-known nonprofits.
—L.F.
