My RSS feeds of late have been delivering to me many interesting posts by Chris Anderson as he explores the different kinds of free. I’ve been specifically interested in his visualizations of the Advertising Model of Free: advertisers pay for advertising, which subsidizes programming, which is then given away for free, with the goal being that consumers will purchaser those original advertiser’s products. There is a great explanation of how broadcast advertising works in the Denver Open Media’s Opening Access video (at about the 1 minute, 30 second mark).

Chris Anderson’s graphic of the same thing is below (C is Consumer, P is Producer, A is Advertiser):

This model of Free is very similar to the standard nonprofit model of giving: Foundations/Donors (D) provide support to Nonprofit Organizations (NP) which then provide free services to Clients/Constituents (C):

That all being said, the nonprofit model doesn’t quite have the same symmetry. In fact, it’s missing a piece that, at least in my experience, very rarely is talked about: what is the relationship of Foundations/Donors to the Clients/Constituents?

I’ve previously explored some of the reasons why nonprofits have arisen in the way they have, including middle-class guilt about the disparities between the affluent and the poor; wealth-transfer mechanisms for the rich; dissatisfaction with the profit motive as an incentive to extract work and induce consumption; greater abundance in society general; and the inability for government agencies to provide services to meet growing needs as a result of the widening gap between rich and poor.

Putting those in context of clients/constituents, the actual people being served, there isn’t that much of a relationship: as a person receiving assistance, one would not care much weather it was coming from the Ford Foundation or the Carnegie Foundation—it is the quality and efficacy of the services that matter, and those are being delivered via the nonprofit.

One way to look at this (and there are many), is to think of the Clients/Constituents as just one part of the larger Society (S):

In this case, what is being transferred between Foundations/Donors and Society in general: reputation, legitimacy, restitution, validation….? That’s an interesting question.

I just received a great set of questions to ask people when conducting Brand Interviews: if you’re trying to lock-down who you are and how to communicate that, it helps to ask people who know you and what they think. These are those questions.

• What do you personally value most about [YOUR ORGANIZATION]? Why is it important to you?

• What do you need/expect from an organization like [YOUR ORGANIZATION]? What other organizations could you/do you expect to meet those needs?

• How would you describe [YOUR ORGANIZATION] to someone who does not know it well? What words/phrases would you use? Why?

• How would you describe the personality of [YOUR ORGANIZATION]? What is it like to interact with the organization?

• In your mind, what does [YOUR ORGANIZATION] do well? What does it do better than any other, similar organization? Where is there room for improvement?

• What are your hopes and goals for the organization? If you were running the organization, what would you change (if anything). What should absolutely not change…what do you consider to be sacred?

• How do you get most of your information about what’s going on [YOUR ORGANIZATION]? How else could we effectively communicate with you?

• Do you visit the [YOUR ORGANIZATION] web site? What are you looking for there? What do you wish were included? How else could the web site be more useful to you?

• Is there anything else you want to tell me? Anything you wish I had asked you?

featured in “PopCo” by Alice Butler (via Angelina):

Ingredients:

2 oz ground almonds

6 oz self-raising flour

2 tsp baking powder

4 oz light muscovado sugar

150 ml corn oil

200-250 ml soy milk

zest of 2 unwaxed lemons

juice of 2 lemons

1 tbsp orange flower water . . . not sure what this is

1 tsp vanilla/ natural vanilla extract

Preheat the oven to 190 degrees (given that this is a British book, I’m guessing convert to F – maybe 325ish?), or less if it’s a fan oven.

Grease a cake tin. A deep 6 inch tin is good but any will do.

Sift the flour and baking powder into a bowl and then add the sugar. Mix in the ground almonds and lemon zest. Add the oil and soymilk.

Use slightly less liquid to make the end result more of a cake and less of a pudding. You don’t have to be 100 per cent precise with

the liquids in this cake.

Now add the lemon juice and mix in thoroughly. Add the flower water and the vanilla and mix again. The result

should look like a thick batter.

Pour into the cake tin and bake for about 40 min. The outside should be brown and inside very soft. Turn out, cool and decorate with fresh mint leaves and strawberries.

Today, according to NPR (and many other outlets), “more than 30 pastors across the country are expected to preach a sermon that endorses or opposes a political candidate by name. This would be a flagrant violation of a law that bans tax-exempt organizations from involvement in political campaigns.”

I’ve previously discussed two pillars of nonprofit structure: Incorporation (and Discretionary Conception) and Tax Exemption. So today lets talk about Restrictions on Political Activity for nonprofits.

Section 501(c)3 of the Tax code is relatively clear on prohibiting candidate endorsement: organizations are prohibited, directly and indirectly from participating in, contributing to, or speaking on on behalf of (or in opposition to) any candidate for elective public office. on behalf of (or in opposition to) any candidate for elective public office.

Nonprofit organizations are allowed though:

• Neutral and non-partisan voter education and registration activities. For example, an organization could indicate how candidates voted in the past or a survey of opinions on an issue, so long as all candidates were included no preference was given to the outcomes.

• Lobbying, so long as “no substantial part” of their activities may be that of attempting to influence legislation. Lobbying rules are complicated but the The Nonprofit Lobbying Guide makes it all very clear.

So how did this all come about: some sources place responsibility upon the shoulders of Lyndon Johnson and reactionary, red-baiting, 1950s politics.

In 1952, the Cox Committee was formed to determine “whether foundations have been infiltrated by communists, as well as whether tax-exempt groups are using their money for stated purposes and are not endangering our existing capitalistic structure.” The committee found that foundations weren’t infiltrated, but were vulnerable. Foundations were powerful and could exercise “thought control” and through this could “materially influence public opinion”( OMB Watch).

Echoing today’s nonprofit criticisms (other than the fear of communist leanings) foundations were knocked for their arrogance, insular and irresponsible mismanagement, cronyism, and ignorance of sound practice—existing tax rules did not compel compliance, “as interpreted by the courts, permits far too much license.” Said one former fund advisor, testifying before the Cox Committee:

“Not a single member of the staff [of The Ford Fund for the Advancement of Education], from the president down to the lowest employee, has had any experience, certainly none in recent years, that would give understanding of the problems that are met daily by the teachers and administrators of our schools…. As a former member of the so-called Advisory Committee I testify that at no time did the administration of the fund seek from it any advice on principles of operation, nor did it hospitably receive or act in accordance with such advice as was volunteered.”

(This quote, along with many others, can be found in the right-leaning American Mercury article

Erin McKean makes the point in a TED talk that, unlike paper dictionaries, online dictionary searches do not provide serendipity: finding something you didn’t know you were looking for.

I take this many ways:

True, but…

How many people regularly flip a dictionary?

How exact is search?

How many people just type the word into Google (which, because internet search sucks, is quite serendipitous).

(via Daring Fireball

In my last post exploring poverty, I defined poverty as “the inability to fully participate in or benefit from society”. This definition sought to move beyond a simple definition of poverty as an economic floor, and towards a broader conception of poverty and a goal for society in general.

To begin this post, I’d like to explore the idea of participation as an opposite of poverty. Using participation as a guide, we can thus provide a conceptual benchmark: a society can be measured by the people who are excluded from it.

Describing poverty as exclusion is not unique. Prof. Yves Cabannes writes extensively upon South American anti-poverty movements and their notions of exlusion. Urban organizer Martin Longoria of Brazil has said “You know what is the opposite of exclusion for us? It is not inclusion, but participation. Active participation is what makes you a full citizen.” (“Poor, or excluded? lessons from Latin America and the Caribbean”. UN Chronicle, March-May, 2001)

Within the United States there are many examples of exclusion, but an illustrative one is an exclusion of age: will our older population, expected to grow with the influx of Baby Boomers (and others of the same age), continue to be able participate within society at the same level they currently do?

There is no easy answer to this question (or the multitude of questions like it); and that we frame it within an easy/complex binary system is perhaps the problem. In approaching questions like these, our most common impulse is to look towards existing problems:

• Older people have difficulty voting

• Older people have difficulty earning a living-wage

• Older people have difficulty socializing with younger people

And breaking these down, we usually approach them as essential elements that are missing or unfulfilled:

• They can’t register to vote

• They can’t get to polling stations

• They are not engaged on issues or by candidates

It is easiest to frame issues as the absence of something currently existing, rather than creating something new. We look for simple indicators of success, rather than describing the outcome as a whole. Our collective inability to accept diversity and create participation can be viewed as a failure of imagination.

Experiment: Describe society if people over 65 years old were fully able to participate within the political system. Do so using language that doesn’t actually use “old people” (or senior citizens, or any subject that would stand-in for an idea of them).

It’s difficult. Instead of saying something easy like “Old people can easily get to polling places”, you have to reframe it as “Polling places are close to and accessible to where people live.” And even more difficult, imagine what form that would actually take: more polling places (micro-polling centers?), transportation (who do you imagine driving?), more opportunities to vote so missing one election is less consequential (micro-ballots?).

Imagine solutions not as absence or fulfillment, but as practice.

_Experiment: Describe a society that has entirely eliminated recreational drug use (we’ll say alcohol, tobacco, and everything else too)? Don’t use the word “drugs” (or any other stand-in). How are people spending their time? How do they relax? Or find thrills Or explore their mind and body? _

You may find yourself imagining everyone as being identical—we naturally seek homogeneity as it is a simplifier and makes imagining easier but at a cost. Try to push away from this and think of the diversity of people you know (or even common stereotypes)? Do not imagine them disappearing; instead imagine their activities transformed according to the constraints of the experiment.

Thinking along these lines allows you to explore incremental changes and improvements that may be more achievable, and, when taken together, be more effective than strictly seeking absence or fulfillment. It also helps you avoid framing things as absolutes. Think middle.

I’ve got one more method to help overcome our innate desire for absolutes and homogeneity: use the double-negative.

Experiment: Describe “not not-poor”. Avoid the logical or mathematical desire to cancel out nots like negative signs. If not-poor is rich, than what is the opposite of that, if it is not poor?

The purpose of this exercise is not necessarily to come to a categorical answer (“…the middle-class…”), but instead explore the meaning and connotations of these words and the alternatives that present themselves when you move beyond them.

From feedback to my last piece, I have left the explanation of this method to the end—but I still find it greatly interesting. It comes from the Ismaili philosopher Abu Yaqub Sijistani, who advocated speaking of God in double negatives: by saying He was “not no-thing” or “not not-wise”, it allowed seekers to “become aware of the inadequacy of language when it tried to convey the mystery of God.” So says Karen Armstrong in A History of God (p. 179-80).

In my last post about nonprofit structure, some interesting and important aspects of tax-exemption weren’t fully explored. Specifically, I glossed over why tax-exemption exists in the first place. Let’s rectify that.

The tax-exemption at the heart of nonprofit organizations—along with “nondistribution constraint” (i.e. one cannot profit from, or own equity in, a nonprofit; it may not inure to someone)—is the the key distinction between a nonprofit organization and any other incorporated entity. The reasons why a nonprofit organization should receive tax-exemption (and the government subsidy it implies) are varied and contested.

Norman Silber’s A Corporate Form of Freedom (p. 167-169) presents the following reason why nonprofit organizations—in aggregate—should receive the special privilege of tax-exemption:

• The difficulty in measuring a nonprofit’s income and assessing an appropriate tax. (Boris Bittker and George Dahdert, 1967)

• It rewards altruistic behavior in support of communities that might otherwise diminish or fail entirely without governmental subsidy. (Prof. William Ginsberg, 1980)

• Tax-exempt services offset services the government would otherwise provide directly. But, to compensate taxpayers for the benefits conferred by government exemption, taxpayers must receive services(“quid pro quo”). This would also require tax authorities to seek direct evidence of need prior to conferring an exemption.

• Tax-exemption contributes to pluralism “by providing the public goods and services that either are undersupplied by the private market or by the government or else not provided in the same socially desirable manner” (“Community Benefit” theorists)

• The nondistribution constraint necessitates that nonprofits operate where the government or market have failed and this thus justifies their tax exemption. (Prof. Henry Hansman, 1980)

• The justification for tax-exemption may be found in understanding nonprofits as part of a “sovereignty”: independent of the state rather than subservient to it. The weakness of this theory being how this quality—and by whom it is determined—is conferred upon these “sovereigns”. (Prof. Eveylyn Brody)

Of all of these theories, “none of them quantify, in the interests of equal treatment, the particular quality that would result in an exemption being granted or denied.”

Additionally, none of these theories provide rationale for why anyone would go to the trouble of forming a tax-exempt organization that inherently denies profit and ownership. The rise of the modern nonprofit sector can be traced back to the 1960s with an increase in government giving and the humanitarian, charitable and altruistic impulses that emerged in culture at that time. As to why those impulses should lead to the current expansive nonprofit field, the following reasons have been given:

• Middle-class guilt about the disparities between the affluent and the poor

• Wealth-transfer mechanisms for the rich

• Dissatisfaction with the profit motive as an incentive to extract work and induce consumption

• Greater abundance in society general

• The inability for government agencies to provide services to meet growing needs as a result of the widening gap between rich and poor

I’ve recently been collecting examples of whale art. My interest mostly lies around their monotonous use in hipster art; and they’re kind’ve cute. I put up on Flickr a gallery of whale archetypes.

Left-to-right and top-to-bottom, the whales are named: Billy, Gus, Tina, Sal, Sanjay, Perth, Jill, Buddy, and Ann. Some of them may be familiar to you.

My radio program piece I posted last week generated some good discussion in the comments. In this post I would like to follow up by providing some background to the discussion that nonprofit organizations are not fully deserving of the aura they they receive. The following is a synopsis of the Nonprofit Structure training I give for AmeriCorps*VISTA members; you can also watch the 40 minute training.

Most people have heard of what I will, for the rest of this article, call nonprofit organizations, nonprofits, or the nonprofit sector. There are many terms though that people use:

• Non-profit (with a hypehen)

• Not-for-Profit

• Charity (or Charitable Organization)

• Agency

• NGO (Non-Governmental Organization)

• Social Change Agency

• Mission-Based Organization

• Community Benefit Organization

• Philanthropic Agency

• Voluntary Sector

• Third Sector (the first two being the Public and Private Sector)

Regardless of what you call a nonprofit, it’s really only but two elements:

1. A Corporation: an incorporated entity that provides limited liability for its agents and its actions

2. Tax Exemption: generated (program income) and contributed (donations) revenue are not subject to taxation

These two foundational pieces are explicitly regulated by the government: state governments determine the rules under which an entity may incorporate; the Federal Government—Congress, the Courts and especially the IRS—determine why a corporation may be tax-exempt. Important point:

By allowing certain corporations to be tax-exempt, the government, in effect, provides an indirect subsidy of about 25% of their income.

(This frame is not my own idea, but was first presented to me by Michael Davidson of Governance Matters from this post on board governance)

Why would the government provide such a subsidy? The rules for tax-exempt organizations are laid out in the 501(c) tax statute, but Nonprofit Organizations, as we think of them, lie specifically within the 501(c)3 statute. This statute lays out exempt purposes for charitable, religious, educational, and scientific purposes (as well as some very specific ones, like international sports competitions). Charitable is defined in the generally accepted legal sense as relief of the poor or distressed, lessening burdens, eliminating prejudice and discrimination and other things.

In actuality, the purposes for which a nonprofit organization can organize are near in-exhaustible. As Norman Silber argues in A Corporate Form of Freedom, court cases during the 1950s and 1960s (especially NAACP v. Patterson and Association for the Preservation of Freedom of Choice v. The Secretary of New York State) eroded Discretionary Conception—the legal framework under which the formative purpose of a corporation could be contested. These court decisions created a near entitlement to organize for any purported social purpose upon the grounds of liberty and the 1st Amendment.

Because of these decisions, it’s perhaps more important to look at the few reason for which a nonprofit may not incorporate, or actions an incorporated Nonprofit may not take. Here they are:

1. May not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

2. None of its earnings may inure to (i.e. there is no equity to be owned), or activities benefit any private shareholder or individual.

Number 2 on that list is a pretty self-evident, but Number 1 is the prime reason that nonprofit organizations are beggared in their ability to effectively change society for the better. The context and effect of this fundamental rule though will have to be left to another post.

I’ve been thoroughly amused by the vetting process for political (and supposedly un-political) government positions. Recently there was the vetting for Sarah Palin, VP for McCain’s Republican ticket:

Defending his choice and the team that helped pick her, McCain said Tuesday that “the vetting process was completely thorough.” Advisers said Palin went through a rigorous process that included a three-hour interview and a survey with some 70 questions, including: Have you ever paid for sex? Have you been faithful in your marriage? Have you ever used or purchased drugs? Have you ever downloaded pornography?

Those 5 questions are good to juxtapose against the Nexis search string Monica Goodling used to research applicants to the Bush Attorney General’s office:

[First name of a candidate]! and pre/2 [last name of a candidate] w/7 bush or gore or republican! or democrat! or charg! or accus! or criticiz! or blam! or defend! or iran contra or clinton or spotted owl or florida recount or sex! or controvers! or racis! or fraud! or investigat! or bankrupt! or layoff! or downsiz! or PNTR or NAFTA or outsourc! or indict! or enron or kerry or iraq or wmd! or arrest! or intox! or fired or sex! or racis! or intox! or slur! or arrest! or fired or controvers! or abortion! or gay! or homosexual! or gun! or firearm!