The old saying, “You can’t judge a book by its cover,” doesn’t mean as much in these digital times (when covers are oftentimes invisible on Kindles and other electronic-reading devices), but it certainly remains true in the world of charitable giving, where it’s sometimes impossible to tell what’s nonprofitable about “nonprofits.” Organizations that qualify for nonprofit status with the IRS range from truly grassroots organizations that depend entirely upon a handful of volunteers to pseudo-corporations that generate tens of millions of dollars in revenue, organizations whose intentions are oftentimes anything but charitable.
Take this particular nonprofit organization’s self-description on its 2013 tax return: “A trade association promoting the interests of its 32 member clubs.” So are these a bunch of blue-collar guys in ball caps and leather jackets drinking beer and slapping backs in a fraternal hall? Or kids gathered in a clubhouse to learn life lessons from a kindly leader in a khaki uniform and Smokey the Bear hat?
Not exactly. This particular trade association is the National Football League and the 32 member clubs mentioned are the NFL’s 32 teams. Buying a “club” these days costs a half billion dollars or more, and the organization’s leader, Commissioner Roger Goodell, is paid $35 million a year for his trouble. Nothing better illustrates how meaningless the term “nonprofit” has become at a time when the IRS approves hundreds more of them every week. Putting “nonprofit” and “charity” in the same sentence or headline, as often happens, makes things even more confusing.
That’s because “nonprofit” is a generic tax designation that applies to, among others, private foundations, public charities, hospitals and universities, the NFL (until it gave up its nonprofit status this past April), Habitat for Humanity, the Memphis Country Club, and volunteer organizations that meet for a cup of coffee every so often.
This story is about nine of the biggest nonprofits in Memphis that focus their attention on the Mid-South. It includes six private foundations that have one main funding source and do not solicit contributions from the public: Assisi, Hyde, Plough, Poplar, Pyramid Peak, and the Urban Child Institute. We’ve also included three major public foundations that act as bankers, investors, marketers, and back-office managers for all kinds of donors: the Community Foundation of Greater Memphis, the Hope Christian Community Foundation, and the United Way of the Mid-South.
We do not include ALSAC St. Jude because, although its headquarters is in Memphis, its focus is global. Nor does this report include local hospitals, universities, or college football bowl-game organizations, because the variety of circumstances needing to describe them would fill up the pages of this entire magazine. Sure, each one must submit a detailed Form 990 to the IRS, but their budgets range from the tens of millions annually to mom-and-pops dependent almost entirely on volunteer labor. Just about every case is different.
Influencing public policy is one of the primary goals of the six single-source private nonprofits listed here, which is why we consider them the cornerstones of our local philanthropic scene. And at a time when city and county budgets are strained, philanthropy here is booming, thanks to a rising stock market, tax incentives, and a spirit of giving among wealthy Memphians, some of whom go to great lengths to do their good works as anonymously as possible.
These days “data-driven giving” is the mantra. Some of our local foundations use the consulting services of another nonprofit, the Boston-based The Bridgespan Group (“achieve breakthrough results”) for just this purpose. Bridgespan’s clients include the Tennessee Achievement School District, the Salvation Army, 100 Black Men, Arts Memphis, the Pyramid Peak Foundation, and Youth Villages.
The biggest impact of data-driven giving here, perhaps, has been in education. “School reform” is in the eyes of the beholder, but the emergence of charter schools and Teach For America as forces in urban education would not have been possible without the financial support of the Hyde foundations. Faith-based outreach to impoverished areas is the forte of the Hope Foundation. The Pyramid Peak and Poplar Foundations, funded by Southeastern Asset Management founders O. Mason Hawkins and G. Staley Cates, respectively, have given more than $100 million to causes ranging from youth athletics to Soulsville to leafy bike paths that now extend across the county. And the conservancies that manage Shelby Farms and Overton Park and the Memphis Riverfront Development Corporation are products of twenty-first-century philanthropy being used to leverage public dollars.
Nonprofits have changed our perceptions of “public” salaries because the bigger nonprofits now pay their executives so much more than similar positions in city or county government. In 1994, when the Memphis Flyer, our sister publication, did its first survey of 40 local nonprofits, the top salaries in the nonprofit sector were around $300,000 for the leaders of Methodist Hospital and Rhodes College. These would be mid-level executive salaries at many top nonprofits today. Hospital system CEOs now make $2 million or $3 million. An experienced private-school leader can make over $500,000, nearly twice as much as Shelby County Schools Superintendent Dorsey Hopson and three times as much as the mayors of Memphis and Shelby County. And the head of the Urban Child Institute makes four times as much as the outgoing director of the Shelby County Health Department.
A final factor worth mentioning is the increased scrutiny of nonprofits in the digital age. Form 990 tax returns, in theory at least, have always been open to public inspection, but getting them in the pre-internet era meant battling lawyers, secretaries, PR firms, and nonprofit CEOs themselves, always with mixed results.
Today, most of this information is readily available at free web sites such as Guidestar, ProPublica, Charity Navigator, GiveWell, and the National Center for Charitable Statistics. There are many recent books about how-to-give and how-to-get, as well as those dedicated to the specifics of small-donor investing, venture philanthropy, social investing, saving the children, saving the elderly, saving young black men, Christian philanthropy, Jewish philanthropy, compassionate conservatives, and equally compassionate liberals. If there isn’t already a book about how to panhandle effectively at road intersections with a cardboard sign, there probably soon will be.
Two good books for those starting to look into the subject are Ken Stern’s Who Really Cares (2013) — a readable take on the Salvation Army’s Kroc Centers, Chess In Schools, bowl games, the Gates Foundation, “charity” hospitals, the Human Fund (really), and Bartlett-based Youth Villages — and Arthur C. Brooks’ With Charity for All: Why Charities Are Failing and a Better Way To Give (2007). More recently, The New York Times weighed in with an op-ed piece, “Who Will Watch the Charities?” by David Callahan, whose premise was that “philanthropies are dangerously opaque.” His piece concluded with a call for a new federal bureau to police charities.
But policing wouldn’t be all that necessary if local media outlets would spend a fraction as much energy reporting on nonprofits as they do on sports, food, and murder and mayhem, and if the foundations and charities themselves would provide better information in useful and more timely fashion. Hopefully, this column will stimulate more local reporting on the subject.
Hence this modest report on some of Memphis’ most important major philanthropic nonprofits. The information here is from each individual foundation’s most recent IRS Form 990.