B Corporations, Technology And ‘Hands On’ Approaches Transform Ways Of Giving
By Sean Belk - Staff Writer
August 14, 2012 - There’s a young, up-and-coming crowd of entrepreneurs, philanthropists, donors and volunteers who aren’t entirely like their parents or their grandparents.
The rising so-called Millennials, or Generation Y, now in their late 20s and younger, may have the same passion, commitment and concern for their communities as their predecessors. But philanthropy experts said many of these young individuals want to take more “ownership” of a cause than Generation Xers, “traditionalist” baby boomers or the “Silent Generation” of givers who have mostly been satisfied with just writing checks to large umbrella organizations for the past several decades.
While the younger generation may not have as much financial capital as previous age groups, experts and studies indicate that many of these young individuals who do or will have money later in life want to have more of a stake in where and how their dollars are spent rather than blankly giving to an over-encompassing charity.
Young philanthropists are also more familiar with technology, armed with instantaneous “crowd funding” through smartphones, social media or websites like Kickstarter.com or Gofundme.com to have a global reach. There are also fresh approaches to philanthropy, such as “benefit” or B Corporations, a new class of for-profit corporations that became legal in California this year, mixing business with solving social and environmental problems.
The generational differences, however, can sometimes become a “double edged sword” and has created new challenges for managing today’s philanthropic organizations at a time when many nonprofits are in desperate need of discretionary dollars, said Jeffrey Wilcox, a certified fundraising executive and president/CEO of the nonprofit consulting firm The Third Sector Company.
“What’s difficult for nonprofits is that [young] entrepreneurs who have a lot of money don’t like to give to a lot of processes that involve committees and a lot of people in decision-making,” he said. “They want streamlined decision-making and they want a larger voice in how their dollars are going to be used . . . The younger generation, at least in my opinion, sees a lot of things that the older generation has not made possible.”
Wilcox added that young individuals are branching out with their own endeavors, goals and philosophies with the technological know-how to “create a social movement over night” rather than pandering to bureaucracies, boards and committees. While he said “due process” is still needed in today’s society, the obstacle for many organizations, Wilcox said, is to learn how to keep young people interested in philanthropy.
‘Partners In Service’
One local example of the next-generation of philanthropic individuals is Rotaract Long Beach, which officially chartered last year and is sponsored by the Rotary Club of Long Beach Internationally, the first Rotaract club, which stands for “Rotary in Action,” was started in 1968 as a youth program and has since grown to become one of Rotary’s “fastest-growing service programs” for young men and women members, often considered “partners in service.”
Katie Gaston, who works as a consultant for a web-based tech firm in Los Angeles, is president of Rotaract Long Beach, which consists of about 25 members age 21 to 35. She said the mission of the group is the same as Long Beach Rotary, but there are differences when it comes to certain age-specific scenarios and technological aptitude, she said.
As “natural social media experts,” some of the Rotaracts are more adept at using social media sites for marketing events and fundraising than older Rotarians, Gaston said. In addition to organizing the 80th Annual Great Sand Sculpture Contest put on this month, the main focus for the Rotaract club this year is to spread the word and to recruit young members, she said.
“One of the core elements to my generation is service and giving back and I know there’s a need and a want within young professionals in Long Beach to do that . . . It’s just having them know about our organization and our outlet in order to serve and to grow,” Gaston said.
Greg Haeselar, president of Long Beach Rotary, said the Rotaract group is more “community based” and focuses more on volunteerism, while the Rotary club, which has about 300 members, has more financial capital to give back to the community. Through two fairly large foundations, the Rotary club has recently been able to pay for: scholarships; books at local libraries; a business summer camp for youth and building a computer room at the new Ronald McDonald House, Haeselar said.
“The young generations do not have the fiscal wherewithal to be making contributions with their treasurers . . . They’re just in a different demographic,” he continued. “Many of them are just beginning in their careers and money is tight . . . They have the same heart as we do and they want to give back, but they don’t have the treasure to do so.”
Still, the large population “bubble” of Millennials, or typically children of baby boomers and Generation Xers, “care deeply about the communities in which they live,” with support and involvement, said Judy Ross, executive director of the Long Beach Nonprofit Partnership, a resource organization for more than 1,000 community-based groups in the Long Beach area.
High unemployment during the recession has forced many younger individuals to volunteer or embrace new entrepreneurial pursuits through technology, she added. “After struggling through this economic downturn, I think people are more open to looking to new ways to do business and to still hold on to their mission to accomplish their goals,” Ross said. “But the process may be a little bit different . . . I think it’s exciting.”
Changes In Giving
Jeff Hoffman, a local consultant primarily in international corporate philanthropy and civic engagement, said the Internet has also enabled younger philanthropists to make a difference beyond their backyard, extending to more specific causes around the world.
In addition, he said today there are far more nonprofit organizations than in the past and contributions are being “spread out” rather than going to just a few large organizations.
Changes in today’s job market have also sparked differences in giving, with donors becoming more individualistic rather than just contributing through a formal setting or through their workplace, Hoffman said. “There’s a lot more competition in the nonprofit sector for the discretionary dollars, therefore, nonprofits have to become more efficient and, frankly, better at marketing what they do,” he said.
Leadership Long Beach, which is celebrating its 25th anniversary next year and has more than 1,000 alumni, has a mission to “develop and connect principled leaders to strengthen the community.” But the group has had to work harder at getting its message across in attracting a larger number of smaller contributions than in the past, said Jeff Williams, the nonprofit organization’s executive director.
“We receive a lot of small contributions and we have to cultivate those relationships . . . One way to do that is we keep telling our story,” he said. “We have an active Facebook page and an e-mail letter. We have recruiting events for people interested in our organization. We didn’t have to do all those things to that level before and we’re starting to be more successful in that area, so people who do want to give know what’s going on.”
Jim Worsham, president and CEO of the Long Beach Community Foundation, which manages donor advised funds, estate trusts and bequests that provide grants to specific service nonprofits and causes in Long Beach, said the concept of giving for young people is more “hands on” and focused on a specific cause through volunteering time.
But he said that nonprofits still need money to operate. “More than writing those big checks, they would just as soon go out and volunteer to help something – and then they get that direct connection,” Worsham said. “I think that’s good, but a lot of people are losing sight of the fact that charities rely on donated dollars.”
While boards of directors typically seek older, mature and sometimes well-off individuals to serve, organizations may soon have to start opening up the doors for younger members, he added. “The old guard boards in town lose members every year through death, retirement . . . or they move out of the area for whatever the reason . . . and they have to replace those people and, honestly, they’re going to have to start reaching younger people to make it work,” Worsham said.
Scott Jones, a Wilson High School graduate who co-founded the nonprofit We Love Long Beach, said the organization spawned out of a need to encourage communities to take more “ownership” of what’s available in their neighborhoods rather than focus on what they lack. The “glass-is-half-full” concept, he said, can also be applied when providing services, whether it’s through training new volunteers or simply focusing on a person’s attributes rather than deficiencies.
Jones added that there’s a general shift toward solving problems through economics of abundance rather than scarcity, such as creating relationships and building on what’s already available in the community. “We don’t base things around what we lack or what we need, we base things in the community around what we have . . . and what we have is pretty exceptional,” he said. “. . . The youth are the future, but they’re actually the present as well, so if we keep telling them they’re the future they’ll never be anything.”
Benefits Of Business
Meanwhile, the private sector has also started to become more of a public partner to nonprofits as well. Just this year, California officially legitimized “benefit corporations” as a new legal business status. B Corporations are for-profit entities, but, unlike traditional businesses, have a clearly defined mission that benefits society and the environment. B Corps, however, have to be certified by B Lab, a nonprofit organization that started the concept in 2007 similar to LEED certification for green buildings, and must meet comprehensive and transparent standards, legal accountability and support sustainable business models.
Dermot Hikisch, head of community development for the B Lab in San Francisco, said the number of certified B Corps has grown from about 40 to 585 across the United States and Canada. He said a large number of them, almost 200, are located in California, and there are about 30 certified B Corps in Los Angeles County alone.
Long Beach-based Bikestation, or Mobis Transportation Alternatives, Inc. has been a certified B Corporation. Hikisch said the company recently put a hold on its status, but said the company plans to re-certify soon. George Mulling, interim CEO and boardmember of Bikestation, said becoming a B Corp has been a way to “open our collective eyes” with a “triple bottom line focus.” He said other local corporations are now taking a look at the new business model.
The B Corp allows corporations to maintain a mission-driven purpose other than just making profits, while sheltering a founder’s legacy, which hasn’t always been the case. Over the course of time some corporations have changed their business models to reflect changing viewpoints from company heirs or shareholders, he said.
Benefits can range from: giving 50 percent to 100 percent of their profits to local charities; to holding all a company’s profit in-house, but becoming more based in community initiatives, such as giving time through volunteering. “It’s up to the company to see the best way they can do good,” Hikisch said.
“Philanthropy and nonprofits have done an amazing job of dealing with some really hard issues out there, but what we have come to realize is that having business work with government and the nonprofit community, will solve the problems by themselves,” he added. “We need business to be a part of the solution – a proactive part – and we’ve seen a lot more mission-driven companies appear in the last couple decades.” James Brennan is co-founder of Los Angeles-based Open Neighborhoods, which was established in 2008 as a community-based advocacy group to provide impoverished neighborhoods with access to rooftop solar panels and renewable energy. The company officially received its B Corp certification status last year.
“B Corps are really focused on using the power of business and the power of the market to solve social and environmental problems,” he said. “Nonprofits provide services to fill underserved needs, but they’re not always market driven . . . B Corps really help catalyze lasting change by having a sustainable business model that can scale and grow with success, and that’s really important as we grow services as solutions that work.”
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