Q&A: The New Philanthropy

George McCully is founder of the Massachusetts Catalogue for Philanthropy. His new book, “Philanthropy Reconsidered: Private Initiatives, Public Good, Quality of Life,” explores the evolution of philanthropy as idea and practice. Before becoming a professional philanthropist, he was a professor of European history. This Q&A was prepared by Youth Catalytics Director of Research Melanie Wilson.

Q: ‘Nonprofit’ as a term really bothers you. What’s the alternative, and does the label really matter?
A: What I’m concerned about is effectiveness in fundraising and in normal expression. You want to have a word that’s precise and positive and says what it is and does, rather than what it isn’t and doesn’t. “Charities,” “philanthropies,” “public benefit organizations (PBOs),” are all better than “non-profit” or “non-governmental,” which say nothing and are misleading. Language always matters, to communication.

Q: Is that why you spend so much time defining philanthropy in your book?
A: Yes. The argument of the book is that the word philanthropy is understood in so many different ways by so many different people that it’s virtually meaningless. It hasn’t been used until recently because it was considered pompous and pedantic. Then it became a household word because of celebrity philanthropy. But people still don’t know what it means.

Q: Your definition is the classic one, you say — private initiatives for public good, focusing on quality of life. Sounds obvious, but you expand the concept beyond a mere type of activity.
When we speak of philanthropy many people think of it as something objective — a sector, or part of the economy. That’s a result of social science. In the book I argue that philanthropy is not a sector, it’s not something objective or economic; it’s something philosophical and educational and psychological. Philanthropy is a human trait many people have and can develop in themselves and others, for public benefit, rather than a set of institutions that spend a certain percentage of money in the economy.

Q: You make the case that America has a special relationship to philanthropy because of its history. How so?
A: Once you decide that philanthropy is private initiatives for the public good focusing on quality of life, it becomes obvious that the Revolution was completely philanthropic. That dawning awareness led me to look at texts from the period and try to figure out whether the Founders themselves thought it was philanthropic, and of course they did — and theirs was what I have called the Classical concept. Once you look for it, it’s everywhere.

Q: How have people responded to that insight?
A: I’ve found it to be very useful in talking to new and emerging donors, the new wealth creators who are coming into philanthropy. They’ve made a lot of money, they’ve done the capitalist thing, and are wondering what next to do with their lives. Philanthropy is the American way to achieve quality of life both for ourselves and our society. It’s the way we learn and practice values. New donors take great pride in entering into a tradition which is classically American, and an essential part of our national character. The way a free people achieves quality of life is through philanthropic, voluntary associations.

Q: You say philanthropy today is in a paradigm shift — a profound, irreversible, structural and strategic change in the way it works and relates to the world. What does that mean?
A: The old paradigm was dominated by the technology of the printing press, the telephone, the industrial economy. The new paradigm is dominated by the internet and the information age. In the 20th century, all charities looked upon large, national corporations as the model to which they should aspire, so large national charities were created, like the Red Cross and The Salvation Army. Now that is no longer the generally agreed-upon model of success, not just in philanthropy but in the economy as a whole. The reason the situation with the Big Three automakers is a national emergency is that the bigger they are, the harder they fall. Bigness in itself is no virtue. Economies of scale have their limits.

Q: So in the new paradigm, smaller might be better?
A: There are tremendous advantages to grassroots, close-to-the-problem, creative problem-solving. And large bureaucracies, while they may be effective in advocacy, don’t automatically provide better programs. So new technology which is inherently decentralizing is going to challenge the big charities, who may find it more efficient and productive to break down again into smaller pieces. A model that seems to be emerging is that small charities in groups can be served technically by umbrella organizations that provide technical services like accounting or public relations. That’s more powerful than each of them buying these services independently.

Q: You say that philanthropic organizations should embrace the new and not waste time on nostalgia. What do you mean?
A: Continuing to do what you’ve been doing is an error in changing times. One of the most common reactions to change is to resist it. That’s comfortable and that’s the way we’ve learned to negotiate the world. But in changing times, when a paradigm shift is going on, it can be dangerous and self-defeating.

Q: We’re entering a recession of potentially historic proportions. How can charities use their understanding of the paradigm shift to successfully adapt and even thrive?
A: Government support of social services is in decline. Charitable giving is increasing. Philanthropy has become chic. The public media have picked it up and are making it a popular movement. The economy, of course, does cut into giving somewhat, but we can still promote charitable giving to high net-worth people, who have never given at the levels they can.

Q: So what concrete steps should executive directors take?
A: First, look at all your sources of income and make sure you’re building charitable giving as an increasing percentage of it. Second, look at how the organization relates to computers and the internet. There ought to be a conscious strategic plan for exploring how what the charity does might be enhanced by internet technology, particularly in social networking, recruitment of volunteers, and the ways in which charities communicate with their clients.

Another issue is field development. In our technology-driven world, data explodes and becomes organized, and new opportunities emerge because of that. For example, there are 62 charities in Massachusetts providing domestic violence and sexual abuse services. The problem of domestic violence is everywhere but the charities are not everywhere. So we’ll sponsor a meeting and show people on a map where the charities are located and where they’re not. If we do that in the presence of donors and grantmakers, it will occur to them that they can invest in the development of domestic violence and sexual abuse services as a field, and create the channels of that investment. If I were a charity, I would want to participate in that. I would want to play a leadership role in the enhancement of the field as a philanthropic resource.

Q: You say charities need to look at their donors and potential donors in a new way. Why?
A: Every charity ought to be looking at donors not as objects to be manipulated, as in a sales transaction, but as opportunities for the growth of philanthropy as a cultural force in our society that will benefit everybody. So fundraisers should be promoting philanthropy as well as promoting their own organizations. You should cultivate a collegial relationship with donors — not just talking to them about why they should give more money to you, but about how you as an expert can help them get more out of their total philanthropy. Ted Turner once said that he had more fun being a philanthropist than he’d had at anything he’d ever done. He said if people just realized the tremendous boost they would get from it, everybody would want to do it.

Q: This time of year we’re all getting fundraising appeals in the mail. What’s your message to people writing checks this holiday season?
A: The message we’re sending to donors is to increase your giving if possible to the human services, but above all pay attention to small- to -mid-sized charities. Ninety-three percent of charities have budgets of less than $3 million. Donors will get more gratification, their gifts will have more noticeable effect, if they’re directed toward small charities for whom economic contraction can be a matter of life or death.

Philanthropy Reconsidered: Private Initiatives, Public Good, Quality of Lifeis available on Amazon.