The Billionaires' Pledge

A lot has been written over the past couple of weeks about the request made by Warren Buffet and Bill and Melinda Gates to their peers that they each pledge to give away 50% of their fortunes before they die. Here's an article from the New York Times. Frankly, I'm not sure what this means.

Many of the people quoted as having made the pledge had already made arrangements to give away most of their money, and are just now announcing it. Even Mr. Buffet concedes, “It’s not like all or half of the money represented is added money, but some of it is added.” And I suspect that much of the money being given to charity will be given to charitable foundations. That's not necessarily a bad thing - it adds to the charitable assets available - but it doesn't immediately help nonprofit organizations, and it limits the amount available to those organizations in any given year.

Perhaps the most important factor in the pledge program is that it brings the idea of charitable giving to the front pages of newspapers for a couple of weeks. If this announcement encourages just a few people to give more philanthropy than they would have before, then it has done some good. And maybe that's all we can ask.

If you would like some ideas about how you can do some good, or if you are an organization looking for help in finding new donors, give me a call.

When non-profits become for-profits.

The North Shore Music Theater has reopened, and many people in this part of Greater Boston are delighted. There's nothing like live musical theater, and the "in the round" stage at North Shore is especially appealing. (See this article from the Boston Globe.)

There's just one thing different - North Shore Music Theater was a non-profit organization. You may remember that last winter they went bankrupt and shut down. The property was taken back by the bank that held the mortgage, and that was the end of that. Until a Rhode Island theater owner, Willam Hanney, decided to buy the property from the bank, and re-open North Shore as a profit making venture.

This is good news for the community, but what does it say about non-profit theater? Why couldn't North Shore survive as a non-profit? They were saddled with debt due to a fire a number of years ago, and weren't positioned financially to weather the downturn. They tried raising the money they needed to survive, but with the economic disaster, and a late entry into fundraising, their efforts were doomed.

If they couldn't survive as a non-profit, how will Mr. Hanney make a profit? One way is staff size. The article noted above mentions that North Shore laid off 50 people when they closed down. Mr. Hanney plans to operate with a full-time staff of six. And I would guess that the education programs that were a big part of the theater's mission will no longer be offered.

So theater comes back to the North Shore of Boston, but a half-century old non-profit organization has disappeared. This can't be good for philanthropy.

Let me know if your philanthropic organization needs help building support. Let's keep non-profits non-profit.