As the Super Bowl approaches, the National Football League (NFL) finds itself in the spotlight. Inevitably, this spotlight leads to various rumors and outrage about the NFL's nonprofit status. Here I will discuss five key myths that are helping to spark the outrage (see the most recent Form 990 of the NFL here for more). In doing so, I should state that I am not trying to defend the nonprofit status of the NFL but merely to point out that perhaps it is more innocuous than it may first sound.
Monday, January 27, 2014
Wednesday, January 22, 2014
The story of the Minnesota Orchestra is perhaps one of the most watched disputes between an arts organization and its employees in recent memory, but certainly not the only one. As reported in the Nonprofit Quarterly, this 15-month long lockout has finally reached an end. One interesting tidbit in the agreement to end the lockout is a deal to share revenues -- not ticket revenues, but endowment income. This interesting agreement makes one wonder whether we will see more of this in the future, particularly since many nonprofits have both (a) relatively large permanent endowments and (b) underfunded pensions that are placing a strain on finances.
Wednesday, January 8, 2014
A bright spot in American philanthropy over the past two years has been the generous donations made by Mark Zuckerberg to the Silicon Valley Community Foundation (SVCF). A gift of Facebook stock in 2012 whose value at the time was around $500 million has soared to $986 million (according to The Chronicle of Philanthropy) was recently matched by another gift of stock at the end of 2013, also worth around $986 million. Many (myself included) have lauded the Zuckerbergs not just for their generosity but also for their potential to change the way wealthy give. Rather than setting aside their wealth in a private foundation to slowly trickle to charitable endeavors, the Zuckerbergs have instead given to a community foundation, a move that has the potential to make a more immediate impact. Before one concludes that is the case, however, it is worth noting that the ways in which their donation is being used have not been disclosed. And, if the reporting by The Chronicle of Philanthropy is correct, SCVF has not made large efforts to divest their interest in Facebook stock let alone distribute it in grants. In other words, this gift has the potential to be very different from the usual route of setting up a private foundation, but it also has the potential of being a de facto private foundation administered by SVCF (except one not subject to 5% distribution constraints since it is not technically a private foundation).
A few things to keep an eye on in the coming months to see whether this is truly a "game changing" gift, an establishment of a de facto private foundation, or something in between.
- Zuckerberg's gift at the end of 2012 was largely responsible for a 43% increase in net assets for SVCF at the end of 2012 (from $1.866 billion to $2.661 billion). During 2012, SVCF awarded $294 million in grants; will we see a 40%+ increase in grants when 2013's results are released, reflecting the impact of the first gift?
- Zuckerberg's gift at the end of 2012 led to 20% of SVCFs investment balance being held in one company's common stock (safe to say that's Facebook) -- not exactly a well-diversified portfolio. If SVCF is continuing to hold all of the donated stock rather than seeking a more diversified portfolio, this could mean that up to 45% of its holdings would be in one company's common stock at the end of 2013.