Archive for April, 2009

New Features

Wednesday, April 29th, 2009

Nonprofit News & Comment has increased the range of media surveyed in its weekly “Major News Stories” feature. Surveyed media now include the Atlanta Journal-Constitution, Atlantic, Bloomberg.com, Boston Globe, Chicago Tribune, CNN, Chronicle of Philanthropy, Financial Times, Harpers, Hartford Courant, Harvard Crimson, HuffingtonPost.com, Los Angeles Times, New York Times, New York Review of Books, New Yorker, ProPublica.org, Reuters.com, Wall Street Journal, Washington Post, and the Yale Daily News.

Because the headlines of stories are often cryptic, I have also begun appending brief summaries of items in “Major News Stories.”

Finally, my apologies to readers for the nonfunctionality of the blog’s RSS feed. It has now been repaired and, if it is a feature you want to have, please resubscribe.

I welcome comments and criticisms from readers!

Peter Dobkin Hall

MAJOR NEWS STORIES (April 20-26, 2009)

Wednesday, April 29th, 2009

GENERAL

“Helping Themselves: With fewer donations and declining investments, nonprofits are thinking creatively about cutting costs and raising revenue.” By Shelly Banjo. Wall Street Journal. April 22, 2009. See complete Wall Street Journal Report on corporate survival strategies in this recession, “Weathering the Storm.”

“Eating From the Hand That Bites You.” By Howard Husock. Wall Street Journal. April 24, 2009. Conservative scholar opines on the perils of government support for nonprofits.

ARTS & CULTURE

“My Sports Bra Is Where, Exactly? As Sports Museum Goes Bankrupt, Feds Seize Hundreds of Items; Richard Petty’s Sunglasses.” By Reed Albergotti. Wall Street Journal. April 23, 2009.

“Who Should Own the World’s Antiquities?” By Hugh Eakin. New York Review of Books. May 14, 2009. This review-essay of James Cuno’s Who Owns Antiquity? Museums and the Battle Over Our Ancient Heritage (Princeton) explores the struggle between “encyclopedic” museums and nations seeking to repatriate their cultural treasures.

CORPORATE SOCIAL RESPONSIBILITY

“Mass. CEOs pledge to help create ‘sustainable economy’.” By Jillian Jorgensen. Boston Globe. April 24, 2009. Reacting to public anger over corporate abuses, CEOs of Massachusetts firms pledge to focus on business practices that consider not just profits, but people, and the environment.

EDUCATION

“Charter Schools Weigh Freedom Against the Protection of a Union.” By Jennifer Medina. The New York Times. April 21, 2009. Some former charter school boosters are reconsidering the role of unions in securing voice for teachers in education reform.

“City Tries New Tactic to Convert Catholic Schools to Charter Schools.” By Javier C. Hernandez. The New York Times. April 22, 2009. Report on the city’s efforts to circumvent New York State’s ban on the conversation of private schools to charter schools.

“Ivy League Lessons: Can college endowments—even now—teach the individual investor?” By Dave Kansas. Wall Street Journal. April 22, 2009. Matthew Tuttle’s How Harvard and Yale Beat the Market (Wiley) is a celebration of the spectacularly profitable risk-taking investment strategies of Ivy League endowment managers. This review examines Tuttle’s conclusions in the light of the current economic crisis.

“Universities Increase Financial Aid Levels; Despite shrinking endowments, schools to meet student need.” By Athena Y Jiang and June Q. Wu. Harvard Crimson. April 23, 2009. Despite endowment losses of 30% or more, the elite private universities plan to keep their promises to increase scholarship aid.

“So You Want to Be a Professor.” By Naomi Schaefer Riley. Wall Street Journal. April 23, 2009. This opinion piece critiques current employment practices in higher education, particularly the use (and abuse) of adjuncts and other part-timers.

“Brandeis to give Rose Art Museum reprieve until fall; Backers question committee’s work.” By Tracy Jan. Boston Globe. April 24, 2009. Continuing debate on Brandeis University’s efforts to close its art museum and sell its collection — a move that has outraged donors and the museum community.

GOVERNANCE

“A Limited Love of Liberty; A former ACLU board member says that the organization has lost its way.”
By John Leo. Wall Street Journal. April 24, 2009. Review of Wendy Kaminer’s Worst Instincts: Cowardice, Conformity, and the ACLU (Beacon), a study of mission drift and board conflict.

“How Business Schools Have Failed Business; Why not more education on the responsibility of boards?” By Michael Jacobs. Wall Street Journal. April 24, 2009.

HEALTH CARE

“Wellness Community gone, but questions persist: Internal strife, unpaid bills spelled the end for treasured Newton facility. By Patricia Wen. Boston Globe. April 25, 2009.

LAW & PUBLIC POLICY

“Amendment Gives Religious Organizations Exemption To Same-Sex Ruling.” By Diana Altimari. Hartford Courant. April 23, 2009. As usual, religious bodies get a free pass when it comes to discrimination.

PHILANTHROPY

“Dogs Get Small Bite of Helmsley Grants.” By Mike Spector. Wall Street Journal. April 22, 2009. Despite Leona Helmsley’s desire to devote her multi-billion dollar charity to dogs, her trustees, given discretion by the courts, make first grants to medical education and research, to homeless shelters, food banks and emergency-services programs in New York, and to causes promoting youth educational opportunities and environmental-conservation. Of $136 million distributed, only one million goes to the dogs (via the ASPCA).

“Family Charities Shift Assets to Donor Funds; Givers Gain Cost, Tax Benefits But Sacrifice Some Control; Leaving Paperwork to Others.” By Mike Spector. Wall Street Journal. April 22, 2009.

“New Group Is Formed to Sponsor Native Arts.” By Robin Pogrebin. New York Times. April 22, 2009. The Native Arts and Cultures Foundation, a new funder of work by American Indian, Native Hawaiian and Alaska Native artists is being established with an initial $10 million from the Ford Foundation.

“New Unrest on Campus as Donors Rebel.” By John Hechinger. Wall Street Journal. April 23, 2009. Donors and beneficiaries protest as financially strapped colleges and universities seek to divert restricted funds to meet pressing institutional needs.

“Annenberg’s New Gallery Space.” By Arnie Cooper. Wall Street Journal. April 23, 2009.
Review of the Annenberg Space for Photography gallery recently opened as part of its Los Angeles office complex.

“Foundation of The Times Suspends Gift Program.” By Stephanie Strom. The New York Times. April 24, 2009. Hard times force New York Times and Boston Globe Foundations to suspend grantmaking.

“Anonymous Donor Gives Millions to Colleges.” By Lisa W. Foderaro. The New York Times. April 25, 2009. See also “Colleges bewildered by anonymous major gifts; One caveat: Don’t try to identify donor.” By Justin Pope. Boston Globe/ Associated Press. April 24, 2009. Over the past two months, a dozen colleges and universities have received over $70 million in donations from a mysterious anonymous donor. Most of the money is earmarked for women and minority scholarship.

“Raising Bill Gates.” By Robert A. Guth. Wall Street Journal. April 25, 2009. Profile of Bill Gates based on unique interviews of family and friends.

RELIGION

“Probe of preachers’ finances is ongoing.” By Christopher Quinn. Atlanta Journal-Constitution. April 23, 2009. Report on progress of Senate Finance Committee’s investigation of the lavish lifestyles of some evangelical preachers.

“New Riverside Pastor’s Compensation Splits Congregation.” By Paul Vitello. The New York Times. April 23, 2009. $600K salary outrages parishioners of New York’s liberal Riverside Church.

“No Word From I.R.S. on Protest by Pastors.” The New York Times/Associated Press. April 26, 2009. Hoping to initiate a test case, on the eve of the presidential election, conservative pastors in 22 states defied the IRS by making endorsements from their pulpits. To-date, the agency seems to be avoiding a costly and embarrassing court battle.

VOLUNTEERING

“More older Americans signing on to volunteer abroad.” By Stephanie Chen. CNN. April 23, 2009

MAJOR NEWS STORIES (April 20-26, 2009)

Sunday, April 26th, 2009

GENERAL

http://online.wsj.com/article/SB124025204612335931.html

“Helping Themselves: With fewer donations and declining investments, nonprofits are thinking creatively about cutting costs and raising revenue.” By Shelly Banjo. Wall Street Journal. April 22, 2009. See complete Wall Street Journal Report, “Weathering the Storm.” http://online.wsj.com/public/page/recession-survival-strategies-042309.html

http://online.wsj.com/article/SB124054215581251539.html

“Eating From the Hand That Bites You.” By Howard Husock. Wall Street Journal. April 24, 2009. Conservative scholar opines on the perils of government support for nonprofits.

ARTS & CULTURE

http://online.wsj.com/article/SB124045622666146669.html

“My Sports Bra Is Where, Exactly? As Sports Museum Goes Bankrupt, Feds Seize Hundreds of Items; Richard Petty’s Sunglasses.” By Reed Albergotti. Wall Street Journal. April 23, 2009.

http://www.nybooks.com/articles/22657

“Who Should Own the World’s Antiquities?” By Hugh Eakin. New York Review of Books. May 14, 2009. This review-essay of James Cuno’s Who Owns Antiquity? Museums and the Battle Over Our Ancient Heritage explores the struggle between “encyclopedic” museums and nations seeking to repatriate their cultural treasures.

CORPORATE SOCIAL RESPONSIBILITY

http://www.boston.com/news/nation/articles/2009/04/24/mass_ceos_pledge_to_help_create_sustainable_economy/

“Mass. CEOs pledge to help create ‘sustainable economy’.” By Jillian Jorgensen. Boston Globe. April 24, 2009. Reacting to public anger over corporate abuses, CEOs of Massachusetts firms pledge to focus on business practices that consider not just profits, but people, and the environment.

EDUCATION

http://www.nytimes.com/2009/04/21/education/21kipp.html?_r=1&scp=2&sq=charter schools&st=cse
“Charter Schools Weigh Freedom Against the Protection of a Union.” By Jennifer Medina.
The New York Times. April 21, 2009. Some former charter school boosters are reconsidering the role of unions in securing voice for teachers in education reform.

http://www.nytimes.com/2009/04/22/education/22charter.html?scp=4&sq=charter%20schools&st=cse

“City Tries New Tactic to Convert Catholic Schools to Charter Schools.” By Javier C. Hernandez. The New York Times. April 22, 2009. Report on the city’s efforts to circumvent New York State’s ban on the conversation of private schools to charter schools.

http://online.wsj.com/article/SB124035692197940977.html

“Ivy League Lessons: Can college endowments—even now—teach the individual investor?” By Dave Kansas. Wall Street Journal. April 22, 2009. Matthew Tuttle’s How Harvard and Yale Beat the Market (Wiley) is a celebration of the spectacularly profitable risk-taking investment strategies of Ivy League endowment managers. This review examines Tuttle’s conclusions in the light of the current economic crisis.

http://www.thecrimson.com/article.aspx?ref=527833

“Universities Increase Financial Aid Levels; Despite shrinking endowments, schools to meet student need.” By Athena Y Jiang and June Q. Wu. Harvard Crimson. April 23, 2009. Despite endowment losses of 30% or more, the elite private universities plan to keep their promises to increase scholarship aid.

http://online.wsj.com/article/SB124054131801151501.html

“So You Want to Be a Professor.” By Naomi Schaefer Riley. Wall Street Journal. April 23, 2009. This opinion piece critiques current employment practices in higher education, particularly the use (and abuse) of adjuncts and other part-timers.

http://www.boston.com/news/education/higher/articles/2009/04/24/brandeis_to_give_rose_art_museum_reprieve_until_fall/

“Brandeis to give Rose Art Museum reprieve until fall; Backers question committee’s work.” By Tracy Jan. Boston Globe. April 24, 2009. Continuing debate on Brandeis University’s efforts to close its art museum and sell its collection — a move that has outraged donors and the museum community.

GOVERNANCE

http://online.wsj.com/article/SB124052903980550357.html

“A Limited Love of Liberty; A former ACLU board member says that the organization has lost its way.” By John Leo. Wall Street Journal. April 24, 2009. Review of Wendy Kaminer’s Worst Instincts: Cowardice, Conformity, and the ACLU: a study of mission drift and board conflict.

http://online.wsj.com/article/SB124052874488350333.html

“How Business Schools Have Failed Business; Why not more education on the responsibility of boards?” By Michael Jacobs. Wall Street Journal. April 24, 2009.

HEALTH CARE

http://www.boston.com/news/local/massachusetts/articles/2009/04/25/wellness_community_gone_but_questions_persist/

“Wellness Community gone, but questions persist: Internal strife, unpaid bills spelled the end for treasured Newton facility. By Patricia Wen. Boston Globe. April 25, 2009.

LAW & PUBLIC POLICY

http://www.courant.com/news/politics/hc-same-sex-marriage-0423.artapr23,0,3521923.story

“Amendment Gives Religious Organizations Exemption To Same-Sex Ruling.” By Diana Altimari. Hartford Courant. April 23, 2009. As usual, religious bodies get a free pass when it comes to discrimination.

PHILANTHROPY

http://online.wsj.com/article/SB124033965884339849.html#mod=todays_us_page_one

“Dogs Get Small Bite of Helmsley Grants.” By Mike Spector. Wall Street Journal. April 22, 2009. Despite Leona Helmsley’s desire to devote her multi-billion dollar charity to dogs, her trustees, given discretion by the courts, make first grants to medical education and research, to homeless shelters, food banks and emergency-services programs in New York, and to causes promoting youth educational opportunities and environmental-conservation. Of $136 million distributed, only one million goes to the dogs (via the ASPCA).

http://online.wsj.com/article/SB124036165997141685.html#mod=todays_us_personal_journal

“Family Charities Shift Assets to Donor Funds; Givers Gain Cost, Tax Benefits But Sacrifice Some Control; Leaving Paperwork to Others.” By Mike Spector. Wall Street Journal. April 22, 2009.

http://www.nytimes.com/2009/04/22/arts/22native.html?sq=native%20arts&st=cse&adxnnl=1&scp=1&adxnnlx=1240430510-NtoVUMWeE/1PYaMrg7QpGA

“New Group Is Formed to Sponsor Native Arts.” By Robin Pogrebin. New York Times. April 22, 2009. The Native Arts and Cultures Foundation, a new funder of work by American Indian, Native Hawaiian and Alaska Native artists is being established with an initial $10 million from the Ford Foundation.

http://online.wsj.com/article/SB124043394794145007.html

“New Unrest on Campus as Donors Rebel.” By John Hechinger. Wall Street Journal. April 23, 2009. Donors and beneficiaries protest as financially strapped colleges and universities seek to divert restricted funds to meet pressing institutional needs.

http://online.wsj.com/article/SB124043954393745231.html

“Annenberg’s New Gallery Space.” By Arnie Cooper. Wall Street Journal. April 23, 2009.
Review of the Annenberg Space for Photography gallery recently opened as part of its Los Angeles office complex.

http://www.nytimes.com/2009/04/24/nyregion/24foundation.html?scp=6&sq=New%20York%20Times%20Foundation&st=cse

“Foundation of The Times Suspends Gift Program.” By Stephanie Strom. The New York Times.
April 24, 2009. Hard times force New York Times and Boston Globe Foundations to suspend grantmaking.

http://www.nytimes.com/2009/04/25/education/25donor.html?_r=1&scp=1&sq=anonymous%20donor&st=cse

“Anonymous Donor Gives Millions to Colleges.” By Lisa W. Foderaro. The New York Times.
April 25, 2009. See also http://www.boston.com/news/nation/articles/2009/04/24/colleges_bewildered_by_anonymous_major_gifts/
“Colleges bewildered by anonymous major gifts; One caveat: Don’t try to identify donor.” By Justin Pope. Boston Globe/ Associated Press. April 24, 2009. Over the past two months, a dozen colleges and universities have received over $70 million in donations from a mysterious anonymous donor. Most of the money is earmarked for women and minority scholarship.

http://online.wsj.com/article/SB124061372413054653.html

“Raising Bill Gates.” By Robert A. Guth. Wall Street Journal. April 25, 2009. Profile of Bill Gates based on unique interviews of family and friends.

RELIGION

http://www.ajc.com/metro/content/metro/stories/2009/04/23/preachers0423.html

“Probe of preachers’ finances is ongoing.” By Christopher Quinn. Atlanta Journal-Constitution
April 23, 2009. Report on progress of Senate Finance Committee’s investigation of the lavish lifestyles of some evangelical preachers.

http://www.nytimes.com/2009/04/23/nyregion/23riverside.html?scp=2&sq=riverside%20church&st=cse

“New Riverside Pastor’s Compensation Splits Congregation.” By Paul Vitello. The New York Times. April 23, 2009. $600K salary outrages parishioners of New York’s liberal Riverside Church.

http://www.nytimes.com/2009/04/26/us/politics/26churches.html?hpw

“No Word From I.R.S. on Protest by Pastors. The New York Times/Associated Press. April 26, 2009. Hoping to initiate a test case, on the eve of the presidential election, conservative pastors in 22 states defied the IRS by making endorsements from their pulpits. To-date, the agency seems to be avoiding a costly and embarrassing court battle.

VOLUNTEERING

http://www.cnn.com/2009/TRAVEL/04/23/older.volunteers.abroad/index.html

“More older Americans signing on to volunteer abroad.” By Stephanie Chen. CNN. April 23, 2009

MAJOR NEWS STORIES (April 13-19, 2009)

Wednesday, April 22nd, 2009

GENERAL

“More nonprofits engage in mergers for survival; As funding falls off, organizations are teaming up to assure their work continues.” By Erin Ailworth. Boston Globe. April 15, 2009

ARTS & CULTURE

“Hostel highlights culture in Boston; Book a room, get a guided tour.” By Don Aucoin. Boston Globe. April 14, 2009.

“Another Art Museum Puts Its Collection on the Block.” By James Panero. Wall Street Journal.
April 15, 2009.

“Colleges Ask Donors to Help Meet Demand for Aid.” By Stephanie Strom. The New York Times. April 16, 2009.

“Artists vs. Blight.” By Alexandra Alter. Wall Street Journal. April 17, 2009.

“Make Room, Cynics; MTV Wants to Do Some Good.” By Tim Arango. The New York Times. April 19, 2009.

EDUCATION

“Faced With Deficit, FAS To Restructure; FAS working groups to help cut down projected $220 million deficit.” By Bonnie J. Kavoussi & Esther I. Yi. Harvard Crimson. April 15, 2009.

“After Years of Rancor, Yale and Unions Reach Deals Early.” By Steven Greenhouse. The New York Times. April 16, 2009.

HEALTH CARE

“Novel Approach to Health Plans Gains Traction; Hospitals and Nonprofits Offer Packages of Basic Care Directly to Small Businesses.” By Sarah Rubenstein. Wall Street Journal. April 14, 2009.

“Patching the Safety Net; Stimulus Money Extends Md. Clinic’s Operation, for Now.” By Megan Greenwell. Washington Post. April 18, 2009.

MEDIA

“StreetWise newspaper may go under; Publication for homeless lost its foundation backing and its advertisers too.” By James Janega. Chicago Tribune. April 15, 2009.

MISCELLANEOUS

“Volunteers in Oregon open a food pantry for poor pets.” Boston Globe/Los Angeles Times. By P.J. Huffstutter. April 19, 2009.

PHILANTHROPY

“Executives give displays of charity in effort to counter public scorn.” By Richard Milne. Financial Times. April 14 2009.

“New Leader Overhauls Ford Foundation.” By Stephanie Strom. The New York Times. April 14, 2009.

“New Foundation Takes Aim at Urgent Threats.” By Stephanie Strom. The New York Times. April 15, 2009.

RELIGION

“After Scandal, Queens Church Moves On.” By Andy Newman & Jason Grant. The New York Times. April 20, 2009.

VOLUNTARISM

“Wife/Mother/Worker/Spy; There’s a New Docent in Town.” By Michelle Slatalla. The New York Times. April 16, 2009.

“Applications to nonprofits skyrocket.” By Shahla Naimi. Yale Daily News. April 17, 2009.

MAJOR NEWS STORIES (April 6-April 12, 2009)

Tuesday, April 14th, 2009

General

“Survival of the Fittest? Charities, foundations struggle over restructuring in sour economy.” By Ben Gose. Chronicle of Philanthropy. April 9, 2009.

“IRS Count of American Charities Can’t Tell How Many Are Active, Defunct, or Dormant.”
By Ben Gose. Chronicle of Philanthropy.April 9, 2009.

Arts & Culture

“Home Is Where You Hang Your Debt.” By Claudia La Rocco. The New York Times. April 5, 2009.

“Making Music With Less.” By Phillip Lutz. The New York Times. March 22, 2009.

“ArtBabble Site Opens Window to World of Museums.” By Kate Taylor. The New York Times. April 7, 2009.

“Mapping the Cultural Buzz: How Cool Is That?” By Melena Ryzik. The New York Times. April 7, 2009.

“D.C. Philharmonic Concerts Postponed.” By Anne Midgette. Washington Post. April 9, 2009.

Education

“Endowment may fall by 30 percent.” By Chetan Narain. Daily Princetonian. April 7, 2009.

“A Rich Education for Summers (After Harvard).” By Louise Story. The New York Times. April 6, 2009.

“Weill Gives Cornell $170 Million, Well Ahead of Schedule.” By A.G. Sulzberger. The New York Times. April 7, 2009.

“Tufts launches volley against bid to unionize.” By Tracy Jan. Boston Globe. April 11, 2009.

Health Care

“Are hospitals passing off their low-profit patients? Stroger pays for transfers from non-profit hospitals getting tax breaks.” By Jason Grotto and Bruce Japsen. Chicago Tribune.
April 10, 2009.

Media

“Will The Boston Globe Get a White Knight?” DealBook – A Financial News Service of The New York Times. April 6, 2009.

“A.P. Seeks to Rein in Sites Using Its Content.” By Richard Perez-Pena. The New York Times. April 7, 2009.

“AP ups stupidity quotient another 16,000 notches.” By Kos. Daily Kos. Apr 09, 2009.

Non-Charitables

“The Downturn Threatens Clubs and Their Clubbiness Private City and Country Associations Tussle With Declining Membership, Revenue and a Mounting Cachet Crunch.” By Brenda Cronin. Wall Street Journal. April 9, 2009.

NGOs

“Reaching across borders.” By Rebecca Knight. Financial Times. April 12 2009.

MAJOR NONPROFIT STORIES OF THE WEEK (3/30/09-4/5/09)

Monday, April 6th, 2009

Arts & Culture

Musicians press Congress for more funding for arts.Boston Globe/Associated Press. April 1, 2009.

Shake-Up Rattles Film Society.” By Larry Rohter. The New York Times. April 1, 2009

Museum Is to Show the Human Side of a Cartoon Titan.” By Brooks Barnes. The New York Times. April 1, 2009.

“MFA exhibiting signs of the times: Museum lays off 33, will freeze pay starting next year”. By Geoff Edgers. Boston Globe. April 3, 2009.

Las Vegas: Portrait of a struggling arts scene: By luring artists, city leaders hoped to renew downtown and add culture to its glitz. Then the recession hit.” By Ashley Powers. Los Angeles Times. April 4, 2009.

Home Is Where You Hang Your Debt.” By Claudia La Rocco. The New York Times. April 5, 2009.

Education

Scholarship Fund Established for WASPs.” Harvard Crimson. April 1, 2009.

Harvard May Cut Capital Spend by $500 Million a Year.” By Michael McDonald and John Lauerman. Bloomberg. April 2, 2009.

Harvard Begins Case Study as Tainted MBAs Reveal Damaged Brand.” By Oliver Staley. Bloomberg. April 2, 2009.

Thriving in District, Charter Schools Are Shunned in Suburbs.” By Daniel de Vise.
Washington Post. April 4, 2009.

Environment

92,000 Acres Sold in Adirondacks, With Protection Pledge.” By Miyeya Navarro. The New York Times. March 31, 2009.

Human Services

Child abuse nonprofit to close 3 sites.” By Marc Larocque. Boston Globe. April 1, 2009.

International/NGOs

Israeli Nonprofits, Shaken by Madoff Scandal, Regroup.” By Isabel Kershner. The New York Times. April 5, 2009.

Law & Public Policy

Public Interest Groups Decry Obama’s Strict Lobbying Rules.” By Dan Eggen. Washington Post. April 1, 2009.

Management

Nonprofits’ Budget Call: Let’s Work Together.” By Ben Johnson. New Haven Independent. March 30, 2009.

Philanthropy

In recession, black-tie events tighten belts: Charities, nonprofits around metro Atlanta report drop in dollars.” By Jennifer Brett. Atlanta Journal-Constitution. April 1, 2009.

Volunteeering

Law Opens Up ‘Encore’ Careers.” By Kelley Green. Wall Street Journal. April 2, 2009.

“Bill Expands Volunteer Opportunities.” Wall Street Journal. By Anne Marie Chaker. March 31, 2009.

House passes sweeping national service expansion.” CNN. March 31, 2009.

“The Yale Effect”: Thoughts on Corporate Citizenship in the Nonprofit Sector

Wednesday, April 1st, 2009

The real estate section of the New York Times on March 24 featured a lengthy piece on the impact of Yale University and its affiliate, Yale-New Haven Hospital, on the city’s economic development.

The article begins with a discussion of a huge new construction project: the erection of a 32 story 500 unit apartment tower on a long-vacant downtown lot. The developer is required to offer 50 studio and one-bedroom apartments at “rents deemed to be affordable”; the rest, with rents ranging from $1,300 to $5,000 a month, are intended to appeal to “the highest end of the New Haven market.”

That a project on this scale has been launched in the midst of the deepest economic downturn since the 1930s is surprising and in light of the crisis in the credit markets. The project is being financed by the Multi-Employer Property Trust, “a real estate equity fund representing union pension fund plan investors.”

Another major effort involves the acquisition of an 8 story office building and abandoned bank, which the Rose Smart Growth Investment Fund, part of a network of green-oriented development firms, is renovating with $8 million in funds from the U.S. Treasury’s New Markets Tax Credit Program.

A third initiative is the construction of a new downtown campus for the region’s community college, which will locate across the street from the Rose project. It is being financed with $200 million in state economic development bonding.

According to the article, this project — and the large-scale development initiatives currently under way — are by-products of Yale’s decision to use is resources to promote economic development in New Haven, where crime and poverty were undermining its ability to attract top students and faculty.

“This is a company town, simply put”

The growth of Yale’s endowment from $1.7 billion in 1986 to $22.5 billion in 2007 (it is about a third less now, due to the recession), enabled it both to invest in the local economy and to expand dramatically. In 2007, the university announced its acquisition of the 138 acre Bayer pharmaceutical complex in nearby West Haven, to which is planned to move much of its scientific and medical activities. It also planned to expand the number of undergraduates and construct new residential colleges in which to house them.

Yale’s expansion not only generated demand for office space (the vacancy rate, even now, ranges between 8 and 13%), but also for downtown residential capacity. The University itself is a major lessor of commercial office space: in one of the new projects, the renovation of a 266,000 square foot building that once housed telephone company offices, Yale is committed to leasing 160,000 square feet of space. Yale’s expansion also brings new graduate students, faculty, and staff who want to avail themselves of the convenience and amenities of New Haven’s museums, theaters, and restaurants.

Beyond the Dilemma of a Nonprofit Service Economy

That said, New Haven remains a gravely troubled city. Its unemployment rate is over 8%.; a quarter of the population lives below the poverty line; nearly a quarter of its high school students drop out before graduating; small businesses are closing; the city has the second highest foreclosure rate in the state — up 127% over last year’s.

The current downturn has hit even mighty Yale — as well as the rest of the city’s nonprofits. The University, having lost a third of the value of its endowment, has cancelled or delayed major construction projects, has instituted a hiring freeze, and is laying off non-teaching staff. How this down-side of the “Yale Effect” will affect the city’s economy remains to be seen.

Until the 1950s, New Haven was hub of a flourishing commercial and industrial economy. Although the city’s population had begun to decline, as residents moved to the suburbs, it remained the home of major industrial concerns including the Winchester, Marlin, and Mossberg arms companies, Sargent Manufacturing (architectural hardware), and Gant shirts, which together employed tens of thousands of employees. It was also a center of nonprofit institutions, but they were a relatively minor factor in the city’s diversified economy.

By the end of the twentieth century, New Haven’s four largest nonprofits — Yale University, Yale-New Haven Hospital, St. Raphael’s Hospital, and the Knights of Columbus (whose national headquarter was in the city), together employed more people than all the other enterprises in the city combined. 70% of the value of the properties on city’s Grand List were tax-exempt. With a declining tax base, the city limped along for decades on state and federal subsidies, while poverty, crime, and physical decay flourished.

“As New Haven’s economy deindustrialized and nonprofitized, it was caught in a painful dilemma: the nonprofit sector growth and increasing centrality, while providing needed employment and services, it also ate into the city’s tax base. For decades, radical and progressive activists campaigned (invariably unsuccessfully) for office under the slogan “tax Yale, not us” — as if payments-in-lieu-of-taxes and/or taxation of exempt institutions was the only solution to the problem of municipal finance.

For decades Yale argued that it could not use its assets to pay taxes because they were constrained by the conditions under which donations were made to the university — conditions which restricted their use to supporting teaching, research, and other educational purposes.

Only when Yale, along with other endowed nonprofits, began to understand that its endowment could be used for more than producing income to support core programs — that its investment strategy could be pursued creatively to both produce income and contribute to the community — the dilemmas was resolved.

Because New Haven is not the only city whose commercial and industrial core has been replaced by nonprofits, the lessons to be learned from the “Yale Effect” go well beyond New Haven. There is a certain appropriateness in this, since it was a Yale professor. John G. Simon, who helped to invent and promote the “program-related investment” — the use of an institution’s capital funds in ways that yield both financial and social returns.