Darrow ZeidensteinVice President, Resource DevelopmentRice University

AFP PresentationAustin, TexasMay 15, 2010

In 2006, Warren Buffet gifts $31B In 2006, Herbert and Marion Sandler gift

$1.3B In 2006, Woodruff Foundation gifts $261.5M

to Emory University January 2007: Philanthropy News Digest

Declares “New Golden Age of Philanthropy” PND: “Many of the mega gifts were made to

universities , often as part of the multi-billion-dollar campaigns.”

2006-2007 marked the peak of the most recent “golden age” of philanthropy

Mega gifts were fueled by extreme economic conditions (excessive leverage)

These conditions no longer exist Time to re-think philanthropy from

efficiency-based metrics to effectiveness-based ones

Retrenchment of the public sector in education, arts, and other sectors

The rapid accumulation of wealth (5% of national income went to the top .01%--3rd time in US history) Global capital flows Unprecedented levels of leverage Relatively low top marginal tax rates

In short, the same drivers that drove early 20th century “Robber Baron” philanthropy

0 5,000 10,000 15,000 20,000 25,000

2000-2007*

1990s

1980s

1970s

1960s

1950s

*most recent data availbale (6.30.07)

Decade Change in GDP(in Billions)

Decade Change in Debt(in Billions)

05,00010,00015,00020,00025,000

Source: Ned Davis Research

*Most recent data available (6.30.07)

Source: Ned Davis Research, 1/14/09

(E500)

60-Year Mean = 155.4%

135

150

165

180

195

210

225

135

150

165

180

195

210

225

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Total Domestic Nonfinancial Debt as a % of GDP

In recessions of one year or less: average of 1 percent drop overall

In multi-year recession, 2.7% on average

2008, giving declined 5.7% (adjusted for inflation)--$6B overall

This is an average, reflecting second-half tailspin in the economy

  2000 2001 2002 2003 2004 2005 2006 2007 2008 Total

Arts / Culture 36 38 31 32 32 46 66 71 48 400

Environmental 8 15 10 8 11 24 21 17 23 137

Foundation 17 8 10 5 10 10 22 13 13 108

Government 4 6  3 3 8 7 7 4 42

Higher Education 284 288 214 180 210 283 311 393 331 2494

Health 31 41 28 44 50 76 92 79 82 523

Human Services 13 72 23 8 12 54 17 19 25 243

International 14 15 10 12 7 18 21 18 20 135

Public Service 32 50 32 29 20 37 23 38 60 321

Religious 3 1 1 4 3 2 5 5 9 33

Unknown 5 4 8  2 15 4    38

Various           1    3 4

Grand Total 447 538 367 325 360 574 589 660 618 4,478 ‘09=468

Rethinking our values

De-acceleration, if not overall decline, in $5M+ gifts

On the donor-side: Rise of public sector Increased tax rates Period of uncertainty

On the receiving-side: less leverage = less willingness to take risk

The end of “philanthrocapitalism” and related “movements” within philanthropy (e.g., venture capitalism)?

Rising importance of development as a managed enterprise—MORE IMPORTANT TO BE GOOD THAN LUCKY

Stabilization of job market, but still plenty active

“Efficiency is doing things right; effectiveness is doing the right things.” Peter Drucker

Our profession has become dominated by the for-profit metrics of efficiency Cost-per-dollar raised ROI Dollars raised per FTE

The donor experience (“satisfaction”): Donor loyalty (attrition rates) Life-time giving growth rates Average gift size over time

Gifts that give vs Gifts that take Not all priorities are equal % of strategic priorities fully funded

QUESTIONS OR

COMMENTS?