Patsy Kraeger

NextGen philanthropists and the transfer of intergenerational wealth

 

posted by
Patsy Kraeger, Ph.D.

Welcome to Research Friday! As part of a continuing series,we invite a nonprofit scholar, student, or professional to highlight current research reports or studies and discuss how they can inform and improve day-to-day nonprofit practice.

In the coming decades, over 40 trillion dollars will change hands. While a large portion of this wealth will be designated for charitable giving, the people who will inherit this wealth—and direct the charitable giving—are relatively small in number. They are called "next gen major donors," and according to a recent report issued by the Johnson Center at Grand Valley State University and 21/64, they will "have tremendous influence on the direction of and support for efforts to improve local communities and solve global problems over the next several decades."

"Next gen major donors" are defined as people aged 21 to 40 who are persons of wealth and are involved with their families' philanthropic activities. The report, titled Respecting Legacy, Revolutionizing Philanthropy, delves into all kinds of interesting questions about these donors. It suggests that they "will face immense, complex social problems in their lifetimes, requiring them to be both generous and smart in their giving."1 The report was based on 310 survey responses and 30 in-depth interviews with people identified as next gen donors. Four key findings about next gen major donors:

Research Friday: Transforming the mindset from charitable giving to the social economy

 

posted by
Patsy Kraeger, Ph.D.

Welcome to Research Friday! As part of a continuing series, we invite a nonprofit scholar, student, or professional to highlight current research reports or studies and discuss how they can inform and improve day-to-day nonprofit practice.

“The impact of new technologies is invariably misjudged because we measure the future with yardsticks from the past.” - Stephen Baker, a technology journalist in a recent NY Times Blog.

Last year I wrote a Research Friday blog post that considered the impact of civic engagement on the economy. I discussed research that found a correlation between civic engagement and the unemployment rate. Although the findings were not conclusive, in states where civic engagement did not decline, employment rates were more resilient and stable.

The term social economy is used more in Canada, Europe and Latin America. The term captures economic growth as inclusive of both commercial and non-commercial activities, including paid and unpaid work. Increasingly, policy and social change has been studied through the lens of the social economy, and there is now a developed scholarly literature in this field (much of it through the European Research Network).

But what is the social economy in the American context? Who is discussing the social economy outside of academic networks? Is the social economy just another buzzword or a new paradigm?

Dr. Lucy Bernholz, in a report coproduced by Grantcraft, Stanford PACS and the Stanford Social Innovation Review, titled Philanthropy and the Social Economy: Blueprint for 2013 (hereafter, “the Blueprint”) challenges readers to think about a new paradigm which looks at all “private resources for public good” (p.2), instead of just private charitable gifts to nonprofit organizations. This is an important step in developing a new language and dialogue that shifts away from the “philanthropic-nonprofit” paradigm (p.2). This is exciting!

Research Friday: Human Capital Performance Bonds. What are they? How do they work?

 

posted by
Patsy Kraeger, Ph.D.

 

Welcome to Research Friday! As part of a continuing series, we invite a nonprofit scholar, student, or professional to highlight current research reports or studies and discuss how they can inform and improve day-to-day nonprofit practice.

The past decade has been rife with ideas on how to scale up successful nonprofit organizations. Calls for scaling have been amplified by the recent economic recession, which brought increased demand for social services coupled with shrinking government dollars. But a structural problem remains: philanthropy does not typically have available capital for scaling.

The Social Impact Bond (SIB), developed in the U.K., was recently adopted in Massachusetts. The SIB is not a traditional bond; rather, it is a capital equity investment pool.i As I discussed in my last blog post, with SIBs, money is paid up front to a nonprofit organization, which in return commits to predetermined benchmarks. The investors assume the risk that the nonprofit organization will meet the benchmarks and alleviate the social problem.

But what if the nonprofit organization was to assume the risk? What if the organization only received payment if the outcome was achieved? This type of bond is called a surety bond, specifically, a Human Capital Performance Bond (HuCap). Minnesota has enacted legislation to pilot the HuCap bond, in a program that will look at the “desirability of using state appropriation bonds to pay for certain services based on performance and outcomes for the people served” (Minn. HF 681, March 23, 2011).ii

Research Friday: Social Impact Bonds: A New Tool for Scaling Impact

 

posted by
Patsy Kraeger, Ph.D.

Welcome to Research Friday! As part of a continuing weekly series, each Friday we invite a nonprofit expert to highlight current research reports or studies and discuss how they can inform and improve day-to-day nonprofit practice.

“I cannot help fearing that men may reach a point where they look on every new theory as a danger, every innovation as a toilsome trouble, every social advance as a first step toward revolution, and that they may absolutely refuse to move at all for fear of being carried off their feet.”

—Alexis de Tocqueville


Alexis de Tocqueville, a French early nineteenth century political thinker and scholar known for his book Democracy in America, often pondered questions of societal well-being, or social policy. De Toqueville’s quote speaks to resisting complacency regarding society’s complexity and invites people to think of new and innovative solutions for bringing change. This kind of phenomenon can be seen in a 2011 joint report from Social Finance, Inc. and the Rockefeller Foundation, titled: "A New Tool for Scaling Impact: How Social Impact Bonds Can Mobilize Private Capital to Advance Social Good." The purpose of this blog post is to summarize the information from this report.

Social service and nonprofit programs have traditionally been supported through philanthropy and government contracts. The last five years has seen shrinking funds from both the government and philanthropic sectors due to a recession economy. Needs continue to grow beyond what philanthropy or government can provide. The emergence of microfinance and social entrepreneurship has given rise to new ideas about the role of venture capital in the social sector. There has been some discussion about for-profit alternatives to the traditional nonprofit model, such as “B” (for benefit) and “L3C” (Low-profit Limited Liability Company) corporations, which combine low profits with a social mission. However, there are questions surrounding the inherent stability of these new business models, given the complexity of financial and other federal and state regulatory requirements. One such model is the Social Impact Bond (SIB).

Research Friday: Strengthening the Economy through Civic Engagement

posted by
Patsy Kraeger, Ph.D.

Welcome to Research Friday! As part of a continuing weekly series, each Friday we invite a nonprofit expert to highlight a research report or study and discuss how it can inform and improve day-to-day nonprofit practice.

When he visited America in 1831, French philosopher Alexis de Tocqueville was impressed with the way Americans from all walks of life gathered together in associations. Tocqueville declared in Democracy in America that these associations were indispensable to a functional democracy and that the knowledge of how to work together was the “mother of all forms of knowledge” in a democratic country.

We have long known that civic engagement strengthens democratic systems. The question this blog post addresses is: does civic engagement strengthen the economy? A recent report authored by several partner organizations, including the National Conference on Citizenship, CIRCLE, Civic Enterprises, the Saguaro Seminar, and the National Constitution Center suggests that there may be a correlation between civic engagement and the unemployment rate.

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