To paraphrase my friend Regg Wilson, there are three things highly successful people can pass on to their kids:

1. Money and other financial assets
2. Skills and habits that lead to success
3. Environment/Infrastructure

If you could only pass on one of these three, says Regg, you would likely choose the third, raising your children in the United States instead of, say, Darfur. If you could only pass on two of these things, you would likely pass on the second and the third, so that even if they started out broke in the land of opportunity, they would have the skills that allow them to create their own successful lives.

And yet, as Jay Hughes pointed out many years ago, all of our planning tends to focus on the transfer of money from one generation to the next.  And this narrow-minded focus on the financial capital to the neglect of the human, social and intellectual capital of the next generation is what causes 70% of estate transfers to fail. That’s right–70% FAIL.

What do we mean by “fail”? It’s not the failure of money to reach the heirs (estate attorneys are effective at the technical aspects of their job), it’s that the family disintegrates and splinters, and soon dissipates the wealth and stature that it once enjoyed.  If you play that 70% out over just a few generations, you will see that grandchildren have just a 9% chance of maintaining the family wealth enjoyed by the current generation.

So what do those 9% who beat the odds have in common?  According to experts like Barb Culver,  three things:

1. They talk about things that matter.  Not just what’s on TV this week
2. They practice organized, regular family philanthropy, instilling a shared identity and a sense of gratitude
3. They include the heirs in the planning. No “surprise” party on their 35th birthday that comes with the revelation that they are the beneficiaries of a $10 million trust when they’ve never learned to balance their checkbook.

Even if we’re not passing on vast sums, these seem to me like practices for healthy families of every size.

UNICEF World Refugee Day is this Saturday, June 20th. In recognition of the day, they recently produced a video featuring Angelina Jolie, one of their global ambassadors and possibly the most famous woman in the world.

According to the UNHCR (United Nations High Commissioner for Refugees), the video is expecting millions of views. It will be played in airports, on television and of course on YouTube. Angelina Jolie will certainly turn heads, but once they listen to the 30-second spot, what is it that UNHCR wants us to do?

“In her new video, Jolie stresses that “Refugees are the most vulnerable people on earth. Every day they are fighting to survive. They deserve our respect.” Jolie calls on the public to “remember them on this day.”

Really, that’s it? That’s the big payoff? “Remember them”? I think UNICEF has done Ms. Jolie a dis-service here by giving her pretty thin material to work with. Surely there is a more compelling call to action for people watching this video? How about “Visit our website for details on how to press for refugee rights” or “Tell your friends about the UNHCR mission,” or

…download our widgets to bring attention to this issue through your own blog or website, or

…become a fan on Facebook to receive action alerts and event invitations, or

…sign a petition telling world leaders how you feel about this issue.

…DONATE to support the work of the UN High Commissioner on Refugees

The sad thing is, UNHCR actually developed a lot of these tools, they just aren’t connected to the video with Ms. Jolie, or to the web press release on their site announcing it.  By searching Google for “World Refugee Day ‘09″ I found live feeds, twitter streams and badges here.

Or how about this: tell them “Don’t Give.”

This celebrity-filled video from Oakwood is everything that an appeal to the masses should be.  Take a minute to watch it and see if you can identify all the famous people…

I have to tell you I have no idea what or where Oakwood School is. And where I saw the video on YouTube there was no “Link below” to click and find out more. But the video uses humor instead of dread, inspiration instead guilt, draws out every possible excuse for not giving, and blows them up when we really examine them. And like every good fundraising appeal, it ends with a “Thank You.”

Drawing on our better selves and being inspired to make a difference, let’s do more than “Remember them.” On this World Refugee Day, let’s take action. Whether you give time or money or access some of your social networks to bring others to the cause, just give a little bit.

A sampling of actions from around the web:

Donate blog revenues from June 20th to UNHCR like Google Earth Blog

Visit the Humanitarian Relief page at Change.org and select one of the actions, like “Call on Investors to Stand Up for Human Rights in Darfur.”

Attend a World Refugee Day event hosted by the International Rescue Committee or join the IRC and Urge President Obama to Welcome Refugees.

Or check out the live video and live chat or find badges on http://www.refugeedaylive.org/

I’m happy to say that this blog has been nominated for a BlogLuxe award in the category of “Most Inspiring Blog.” BlogLuxe recognizes women bloggers and is having a reception here in Chicago as part of the BlogHer ‘09 conference in July. If you’ve found The Philanthropic Family to be inspirational when thinking about gift-giving, raising charitable children or just being more mindful of how philanthropy fits into your everyday life, I hope you’ll click here to vote.   Thanks for your many comments, suggestions and words of support over the last 15 months.

I assume you’re not spending your nonprofit’s money to hold lavish parties. (If you are, stop.) Other than that bit of wisdom, I do not have tips to cut costs for your nonprofit (join Costco?).  But that’s mostly a losing game, I think, trimming operations and trying to squeeze pennies out of the expense side of the ledger.  Suriving and thriving is, over the long term, about building a committed, passionate base of supporters, not about reducing your phone bill (try Skype?).  There is no magic shortcut and no secret handshake to get the funding you need. Instead, there is only a long-term prescription for organizational health: “Always Be Cultivating”

Your Brand is your Most Important Asset. In these times, authenticity, accountability, transparency and impact are the key words.  Of course, you can’t just throw those words around, you need to determine your own authentic identity.  My hunch is that successful nonprofits, though, are already living those words and it’s just a matter of cultivating the brand image. Great examples of brand winners include charity:water, kiva.org and Acumen Fund.

On the flip side, here’s a great Twitter stream from an environmental nonprofit:

• “Goat Milk for lather, Honey for its natural sweet scent, and Oatmeal for gentle exfoliation. Soap in our shop http://is.gd/rBoI“
• “This guy makes a solar cooker out of 2 cardboard boxes, wins 75k and may save forests. How cool…http://twurl.nl/oc3pko“
• “New post: Why Is This Egg Different from All Other Eggs?http://is.gd/rv5n“
• “Let the sun shine onto your outside solar lanterns. http://is.gd/rrnO“
• “Guide for kitchen countertops. Icestone, Vetrazzo, granite or wood.http://is.gd/riVi“

My rule of thumb is that you should aim to have at least 5 tweets that are not about your organization for every one tweet that is specifically about your organization. Anything more is probably overly self-involved.

If you can provide that kind of opportunity for association and positive identity, then when you need to raise funding for a new project or to cover an operational shortfall, your passionate supporters will be more than happy to chip in.

A friend of mine once said about a mutual acquaintance of ours “she was born with a silver spoon in her mouth but she thinks she mined the silver.”

Silver spoons of privilege, of course, come in many shapes and sizes, including class, race and gender.  But in his book “Outliers,” Malcolm Gladwell exposes some of the previously unconsidered forces of place and time that combine to create successful individuals like Bill Gates or John D. Rockefeller.

Rockefeller, he points out, is one of 14 Americans all born in a single decade who find themselves on the list of the 75 richest people in all of recorded history. It’s mind-blowing to think that 9 of the most wildly successful “self-made men”* in all of history just happened to be born in the same decade.  Here’s what Gladwell says:

Gladwell uses the story of Bill Gates extensively in “Outliers,” effectively debunking the myth of the “self-made man” by showing how a confluence of events and factors outside of Bill’s control–e.g., the fact that his school PTA purchased one of the first computers with individual workstations instead of laborious punchcards and he had unfettered access to it; the fact that he was old enough to afford one and young enough not to have taken on a desk job and a mortgage when the first personal computers were available to the public–allowed him to become the world’s most successful software mogul.

In my experience working with first generation wealth creators and entrepreneurs, they are usually the first to understand and acknowledge that the whole “self-made” thing is ridiculous.  They might not have been born with economic privilege but there were key events, key opportunities or connections or coincidences that opened the path to success before them.  This is why I think entrepreneurs seem to favor education so heavily in their giving. And this is why they are so generous in giving back–thanking the people and institutions that provided them with opportunity and trying to make sure as many people coming up behind them have similar opportunities.

We want to start that new graduate off right, of course. I bet what they want most is a job. But after that, the best thing we can give them, really, is a good set of habits on which to build their financial lives. Saving is something we have to learn.

Start them down the road of financial security and social responsibility–a pair of objectives often referred to as a “double-bottom line”–by funding a money market, savings account or CD through a community development bank. Throw in environmental sustainability and they get a “triple-bottom-line” return on your investment.

For relatively young folks just starting out, there are two great institutions you should consider.

Shorebank

With branches here in Chicago and throughout the Midwest, Shorebank is the grandaddy of them all. The first community development bank in the nation, Shorebank was opened in 1973 “to demonstrate that a regulated bank could be instrumental in revitalizing the communities being avoided by other financial institutions.” To the people in the low-income communities where their branch offices are located, Shorebank is like any other retail establishment: checking, savings, loans and IRAs.

But Shorebank has also cultivated the understanding and specialized expertise needed to lend to nonprofits, religious institutions, community development projects and environmental improvement projects. Rather than whisking a poor community’s money away to be lent to big corporations and wealthy people who don’t need it, Shorebank invests back in the people and institutions who are their retail base.

For that new graduate, “Development Deposits” might be a great start to a lifetime of savings. “Your personal financial decisions can be an investment in your values – building a strong economy, a healthy environment, and a vibrant community.” Shorebank deposits are fully liquid and earning market rates while providing the capital for Shorebank to lend to these crucial organizations and individuals. It’s a bank you can feel good about.

Calvert Foundation

Calvert is another storied institution in the realm of socially-responsible investing and cash management. Their “flagship” offering is the Calvert Community Investment Note, which allows you to choose the term for this CD-like investment and even choose an interest rate of 0% to 3%. These days, a guaranteed 3% is looking pretty peachy, although lower interest rates enable lower loan rates for their borrowers, who work in the areas of Affordable Housing, Microcredit, Small Business Development, Community Facilities and Social Innovations.

Much like you can choose to give a nonprofit general operating support or target your donation to a particular program, Calvert allows you to do a note that they can lend as they wish, or target your investment to be lent within a particular geography, such as Gulf Coast (to further recovery from Hurricane Katrina), another region of the United States or internationally.

“With our Community Investment Notes, my husband and I are able to invest much more toward helping the poor than we could possibly give.”

– Kelly S., California, Investor since 1998 (from the Calvert web site)

With both ShoreBank and Calvert Foundation, you can provide resources for your graduate to start saving, investing and provide a critical community service at the same time.

If you’re interested in the social enterprise sector, where businesses seek to do good and to do well at the same time, you will want to be among the first to subscribe to the new publication “Beyond Profit.”

I love the name because it nicely captures the mood of the social enterprise sector.  The need to make a profit as a business entity is a fantastic motivator, and it forces you to listen to the people, get immediate feedback from the market in terms of sales numbers, and adapt your products and services to meet real needs. The profit motive is a tool. But of course it’s about more than making a profit, it’s beyond profit.

A preview of the first issue reveals a whole lot of fantastic, relevant content. Interesting articles, like

• Ten Ways to Get a VC’s Attention
• Investment: Is Recession a Good Time to Invest in Social Enterprise?
• Entrepreneurship: Ten New Ideas that Could Change the World
• Torch Bearers: Can you Teach Social Entrepreneurship?

Plus upcoming conferences, news briefs, “companies doing good,” info on different social entrepreneurship programs  at universities and other great tidbits.

My only complaint is that, if they publish it too often, it will end up being the next Economist–too much for a working stiff to possibly get through and therefore a source of guilt instead of satisfaction.

Beyond Profit is “brought to you by Intellecap – a social investment advisory firm providing services to the for-profit development sector in areas such as microfinance, water, energy and education.” Those interested in social investing in India will find Intellecap particularly relevant.

Looking forward to receiving my first issue.

“Embedded philanthropy is transforming everyday commercial transactions for the public good.”

Catch me on the right day, and I agree wholeheartedly with this statement. Other days, it seems like we’ve got a tiger by the tail.

What is “Embedded Philanthropy”?

Lucy Bernholz of Philanthropy 2173 coined the term “embedded philanthropy” to describe the trend of integrating a charitable donation as “part of any other financial transaction, such as checking out of the grocery store and making a donation to diabetes care.”

You’ve probably participated in embedded philanthropy. A few examples of embedded philanthropy from elsewhere in this blog: A mutual fund that donates a portion of their proceeds to charity; TOMs shoes that give a pair to a child for every pair you buy; and of course the grandaddy of them all, Product (RED).

Sounds Harmless. So Why the Debate?

Here’s what’s potentially good about embedded philanthropy: it brings charity into our everyday lives and makes it easy.  It allows us to express our identity and our values and align our consumer behavior with the causes we care about. I think we have to start using our purchasing power in this way to motivate corporate actors to behave in more socially responsible ways because corporations are some of the most important actors in this chess game of social change.

Here’s what’s potentially bad about embedded philanthropy: it could make us thoughtless about philanthropy and it could end up being a “corporate whitewashing” tactic where companies pay a relatively small percentage of profits to convey an image of corporate social responsibility that may not be backed up by the rest of their labor, environmental and social practices. When corporations cap their donations regardless of the number of units sold, it’s unclear that individual purchases actually increase the amount of money going to charity or if they just burnish the corporate reputation of the advertiser.  I think this is a real danger and wrote about it here.

So, like most things–marketing, elected office…butter–embedded philanthropy is a neutral tool that can be used for good or evil. We have to figure out how to use it responsibly so that, as people who are invested in positive social change and real corporate citizenship, we don’t just wait and hope for the best.

Charities are Not Victims, They are Co-Conspirators

Charities themselves are on the front lines of this effort. They are the ones who allow their names and images to be used by the drug stores and clothing retailers and the credit card companies. And to be practical, the promise of a steady stream of corporate dollars and the backing of a corporate marketing budget is incredibly enticing.

But charities need to make sure that the corporations who approach them for an embedded philanthropy opportunities act in a way that is consistent with the nonprofit’s values.  Not just talk in that way in a couple of feel-good meetings, but act in that way. Charities should ask for a report from KDL research or another source that can provide a snapshot of the larger picture of corporate responsibility. Charities are responsible to make sure their own good name is not used as part of a whitewashing effort.

I suspect that a few charities will be embarrassed by their association with a corporation that turns out to be semi-evil before charities start taking this responsibility seriously.  But don’t let it be your organization that gets dinged: if the corporate report card is a “C” overall, take the principled stand and turn down the deal. It will do more to further your mission in the long run than a few extra dollars.

Another way to approach this is almost like shareholder activism, establishing partnerships and mutually beneficial relationships and then using the insider status to change the status quo. Can you imagine if Susan G. Komen for the Cure pressured every one of its 60 corporate partners to offer decent health insurance with preventive care to its employees? I bet they’d have a lot of leverage.

If Corporations are by Definition Sociopaths, How can they be Socially Responsible?

For the companies who wish to get some attention for their corporate citizenship through the use of embedded philanthropy, here are a few best practices:

1. If your corporate social responsibility office falls anywhere under your sales or marketing function, you’ve got the wrong idea.  It should be a cabinet-level position reporting to the president or CEO.
2. You should get to know the charity before hitching your wagon to their star, and the best way to do that is to get involved. Start your relationship with something other than cash contributions. Maybe by donating professional skills of your workers, like expertise in logistics to help an international aid agency that needs to deliver supplies to remote areas. Your employees will be a fantastic source for due diligence.
3. Don’t cap your maximum donation. Respond to the will of the people. This is one reason why embedded philanthropy, where the amount of the donation is explicitly added on to the purchase price, is a better model than cause marketing, where a percentage of the sale price is diverted to charity.
4. Disclose the details of your arrangement with the charity on your web site, and if possible on the packaging or marketing materials. For example, don’t just say “a percentage of profits,” but say the exact percentage. And don’t use the word “proceeds” because consumers don’t know if that means gross sales, net profit or what. If you’re too embarrassed to list the exact amount then take the hint and up your contribution. When you consider what you’re getting out of the arrangement, make the the charity is getting a commensurate benefit.
5. Align your business practices with your particular cause, so that you’re demonstrating more than a token commitment. For example, if you’re supporting a health-related cause, re-examine your health insurance or long-term disability policy. These things are financial commitments as well, and though not as flashy they are in many ways more important.

If you incorporate these best practices into your embedded philanthropy program, you would welcome and promote transparency. If you use corporate philanthropy as window-dressing, beware. The consumer public is going to figure it out and you’ll end up looking like a phony–a death sentence in today’s authenticity-adoring society.

This blog post is part of the Embedded Philanthropy Blog Series, sponsored by Telecom for Charity. The blog series was launched in May 2009 to highlight expert thinking and encourage discussions on the state of embedded philanthropy in today’s economy.

Many times the debate over nonprofit versus for-profit compensation focuses on the executives of the respective organizations, but the participants in this fantastic conversation on the Chronicle of Philanthropy have brought the focus down where it belongs: to the young people on the front lines.  Several commentators point out that it’s the entry level positions where the disparity is hardest to swallow.  For bright kids graduating from college with a mountain of student debt, it’s tough to ask them to choose between $30,000 and a sense of fulfillment and $50,000 with a 401K and good health insurance.  The current emphasis among donors on “low overhead” at charitable organizations is leading to a brain drain from the sector that most needs an influx of young workers.

Personally, I find it a bit self-righteous to tell those who want both financial security and the opportunity to make a difference “the nonprofit sector DOES NOT need you.”  Really?  Because we’ve solved all the world’s problems so effectively and don’t need new ideas and new talent?  Because Baby Boomers  heading up nonprofits never plan to retire so that new leadership is needed?

You know what?  Forget this debate, you’re right.  Kids, if you hope for a double bottom-line return on the investment of your own talents and intellect–both social and financial–I’ve got a sector for you. It’s called social enterprise, and they’d love to have all the passion and idealism and ambition and energy you have to offer.

Let the masochistic working poor and their aging institutions whither as talented young people seek to do good and to do well. It may be painful and pointless, but at least they’ll feel good about themselves.

I’m not a fan of Wilco, at least I think I’m not.  It’s possible, if they have a song on mainstream radio, that I’ve heard it and maybe even liked it. I know this makes me unhip. To further show my musical geek-out, let me just confess that I just don’t get Adam Lambert’s screeching on American Idol.  In fact, I have a theory that Adam Lambert is actually a satirical character being played by Zac Effron in pancake make-up.  America, you’re being punk’d.

(My Chicago partner-in-crime at Foundation Source, Chris Wright, a music guru who offered to read this post before it was published–to keep me from embarrassing myself–says that Jeff Tweedy’s previous claim to greatness was his time in Uncle Tupelo and the “No Depression” album. Okay, does that redeem me? )

Anyhoo, back to Wilco in 2009. Their latest album was just leaked on the Internet. This is no surprise to the music biz, it seems to happen all the time. Personally, I prefer to hear the finished versions of songs that the artists are happy enough with to release for public consumption but I understand that some people also watch the “deleted scenes” on DVDs.  Folks, they are deleted for a reason.

In reaction to the leak, Wilco didn’t stamp its collective little feet and complain about the unfairness of file-sharing–the band even offered a link to the download on its own web site, to save you some time trying to find it.  Instead, they offered “our usual guilt abatement plan for downloaders. ”  For all you naughty MP3 pirates, “we suggest you make a donation to one of the band’s favorite charities, the Inspiration Corporation – an organization we’ve supported in the past & who are doing great work in the city of Chicago.”

I love that the band has made peace with its complete inability to force people to pay them for the music but is turning this into an opportunity to use their fame for the benefit of their favorite charity.

Inspiration Corporation

Inspiration Corporation recently got attention as part of the True North commercials aired during the 2009 Oscars.  A well-loved Chicago institution, Inspiration Corporation is perhaps best known for Inspiration Cafe, but provides a whole range of programs to assist homeless people to reach self-sufficiency, helping them with the kind of support structures so many of us take for granted, like a phone number where we can be reliably reached.

“Through its supportive services, employment, and housing programs, Inspiration Corporation assists more than 2,500 individuals and families affected by homelessness and poverty each year – serving as a catalyst for self-reliance.

Inspiration Cafe, located in Uptown, and The Living Room Cafe in Woodlawn, serve meals in a restaurant-style setting and provide supportive services in a therapeutic community designed to help individuals on their journey toward self-sufficiency;

Open Case Management offers case management, information and referral services, and direct financial support to any community members, typically to address a temporary crisis or transition. In partnership with Emergency Fund, Inspiration Corporation provides cash grants to prevent eviction and homelessness.

Cafe Too, is a culinary job-training program including an award-winning restaurant open to the public at 4715 N. Sheridan Road in Chicago’s Uptown neighborhood;

The Employment Project, offers career services, employment preparation training, tuition subsidies, employer outreach, and job placement and retention services throughout Chicago;

Community Voice Mail, offers free, 24-hour voice mail service for phoneless, homeless and low-income individuals enabling them to connect with family, employers, housing and service providers;

The Engagement Center, provides daytime social services, laundry, showers and bag lunches in a warm and safe environment;

Housing Services, offers a housing locator, rent subsidies and social services to help individuals and families find and maintain permanent housing.

Tip o’ the hat to Wilco for going beyond its checkbook to help a cause it cares about, and also using its fame and access to a loyal fan base to generate support and hopefully connect some folks with the mission of a fantastic nonprofit.

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