Ask SDG Staff

In our Member Survey 2002, you told us that you highly valued access to information in the field, resources, and referrals. Email us with specific philanthropic questions. We are happy to do literature and web reviews to share the latest stats, trends, and practices.

For general Frequently Asked Questions regarding philanthropy, visit our public FAQ's

Previously Asked Questions...

1. We are trying to develop a benchmark for our level of corporate giving. Are there are any standards?
2. Are there standards or guidelines for a foundation's administrative costs?
3. I frequently hear that we should be concerned with self-dealing. Can you tell me exactly what self-dealing is?
4. What are the rules of paying family members to serve on our board?
5. We are looking for a consultant to help our foundation develop a strategic plan, do you have any recommendations?
6. Do you have a sample RFP we can use to hire a consultant?
7. Our foundation recently received an intriguing proposal from Youth Cycles, a nonprofit in the south county. I've never heard of them, do you know anything about them?
8. When do you use the term "grant" and what other terms do you use synonymously? Do you have any arguments for the term "grant" or for other terms, i.e. support, contributions, etc...

1. We are trying to develop a benchmark for our level of corporate giving. Are there are any standards?

According to the data in Giving USA 2000 in 1999 corporate giving represented 1.2% of corporate pre-tax income, and the 30-year national average is 1.3% of pre-tax income. The peak of corporate giving occurred in 1986 when the average reached a high of just over 2%.

However, corporate charitable contributions represent only a portion of corporate support for nonprofits. While supporting nonprofits cause-related marketing, sponsorships, and other joint promotional activities are not considered "giving" and therefore are not calculated in the above corporate giving percentages.

back to top

2. Are there standards or guidelines for a foundation's administrative costs?

There is no specific percentage for administrative costs for a foundation; the IRS notes that all administrative costs must be "reasonable and necessary". According to a survey by Association for Small Foundations, average administrative expenses were 1.8% of total assets for foundations with paid staff and .74% for foundations with no paid staff. The Council on Foundations recently reported a similar study noting that the median charitable administrative expenses were .47% of assets and 10.4% of grants.

back to top

3. I frequently hear that we should be concerned with self-dealing. Can you tell me exactly what self-dealing is?

According to Family Foundations & the Law, a COF publication (www.cof.org), private foundations are prohibited from entering into any financial transactions with disqualified persons*. This applies even if the transaction is fair and reasonable and benefits the foundation. Prohibited transactions include, but are not limited to:

• The sale, exchange, or leasing of property.
• The lending of money or extension of credit.
• The furnishing of goods, services, or facilities.

*Disqualified persons include officers, directors, trustees, and substantial contributors to the foundation. Family members of each of these people are also disqualified.

This is a legal question. Contact your foundation's legal counsel for questions or concerns directly related to your foundation.

back to top

4. What are the rules of paying family members to serve on
our board?

According to California law (CA Corporation Code Section 5227) compensation to a family member is not allowed unless a majority of the governing board is made up of non-family members.

California is the only state to limit compensation in nonprofit organizations. Federal laws do not prohibit paying family members, so you will hear of foundations paying family members as directors and trustees. According to the COF's Foundation Management Report (1996), 75% of the 172 family foundations surveyed paid no fees to governing board members and over 93% of family foundations with less than $10 million in assets did not pay fees to board members.

This is a legal question. Contact your foundation's legal counsel for questions or concerns directly related to your foundation.

back to top

5. We are looking for a consultant to help our foundation develop a strategic plan, do you have any recommendations?

SDGrantmakers cannot recommend a consultant, however, we are happy to send an updated list of consultants that our members have referred in the past. It is a good idea to interview each to determine their experience, work habits, and to develop a rapport. SDGrantmakers has many materials on just this subject - if you are hiring a consultant, please let us know and we'll be happy to send you guidelines. In addition, below are a few questions you may want to ask:

• What strengths do you possess that will prove particularly helpful in connection with this project?
• Have you worked on similar projects or consulted with other groups facing problems similar to ours? What did you learn from the experience? What would you do differently if you could repeat the experience?
• How would you describe the challenges we face from the limited amount you now know about us?
• Describe your work process. How would you work with our staff, board, and executive director?
• Are there other members of your consulting team who would be working with you? Who are they? How would you propose to divide up the tasks among your team members? When can we interview them?
• What problems do you anticipate as we begin to work together? How can we best address these problems early on?
• Talk about the responsibilities we must assume in order to make our work together successful.
• Are you available to complete this work during the time we've specified?
• And finally: What else should we be asking you? What else should we know about you, your experience or about what it would be like to work together?

back to top

6. Do you have a sample RFP we can use to hire a consultant?

With regards to sample RFP's, unfortunately, the resources for sample RFP's are surprisingly limited. I suspect that is because consultants tailor their services to each project and there is no boilerplate for strategic planning. One of the strategies I've used in the past, is distributing an RFQ, a Request for Qualifications and similar to RFQ's, I've heard of other foundations posting RFI's, Request for Information. An RFI/RFQ allows consultants to respond to projects without automating their services.

An RFQ generally includes the following pieces:

• Description of the organization
• Brief description of the goals of the project, including timelines, project assumptions, and tasks/activities Request for consultant's materials, i.e. brochures, website, testimonies, etc.
• Request for cost structure -- while most strategic planning is charged at a lump sum, I generally ask their hourly wage for incidentals and/or implementation
• Request for a copy of a final report consultant prepared for a similar project, i.e. strategic plan, program final report, survey report, etc.
• Request for client references -- I generally ask for clients the consultant has worked with in the past 3 years
• Submission requirements, including who to address questions to, and deadlines -- I also like to tell them how many RFQ's I am requesting, i.e. I've sent this to 5 consultants throughout Southern California
• Next Steps -- if you intend to interview finalists, etc.

No matter how many questions you try to address in an RFQ, inevitably each consultant will contact you with issues. That is a good opportunity to determine their working and communication styles, and how well they understand the proposed project.

back to top

7. Our foundation recently received an intriguing proposal from Youth Cycles*, a nonprofit in the south county. I've never heard of them, do you know anything about them?

No, I am not familiar with Youth Cycles and would be uncomfortable offering opinions on various nonprofits. To hear about various nonprofit throughout San Diego, we recommend asking other grantmakers, if you are a member you can send out an email on the SDG Listserv to your colleagues in San Diego. Simply email your question to members@SDGrantmakers.org.

You can also search for SDGrantmakers by program area, such as Children & Youth, in our online Member Directory.

In addition, you may look up financial records of the organization at www.guidestar.org.

*The name was changed to protect the innocent.

8. When do you use the term "grant" and what other terms do you use synonymously? Do you have any arguments for the term "grant" or for other terms, i.e. support, contributions, etc...

Because there is no standard on which word to describe charitable distributions, SDGrantmakers members gave various responses to this query:

Susan Cornell, Nokia: One term Nokia likes to use across the globe, is "investment". I think that's because of our culture (Finnish), but it's one that we have used.

Al Panico, Waitt Family Foundation: We use grant, contribution, support, gift -- fairly synonymously. We also try to use the terms partner and agency in place of grantee. I personally like the term "associate".

Marisol Lopez, International Community Foundation: GRANT: an award of funds to an organizationor individual to undertake charitable activities (COF glossary). The term grant can be used as a noun or verb: XYZ foundation awarded a $000 grant to ABC., XYZ foundation granted $000 to ABC. Other words: donation, award, funding, social investment. The purpose of the grant is the key element... is it for charitable activities?

Chuck Hansen, Viejas Enterprises: We would like to use the term bingo but.........the most common and accepted is still grant (!).

Tim McCarthy, McCarthy Family Foundation: In our annual report, we follow the IRS specification of contributions, gifts and grants (which are aggregated together in the 990PF, Part I, line 25). For us, "grants" are made in response to specific grant proposals. "Gifts" are usually unsolicited donations by us (infrequent but perhaps in response to a general appeal) and anything else would probably be, by elimination, a "contribution" (charitable) not otherwise classified. Beyond these three, "donation" would probably be the next most common (guess that's what donors give?). "Support" seems a bit vague to me; I can support an organization without giving them any money? The primary argument I would use in favor of "grant" is that for organizations like ours that disburse payment to charitable organizations pursuant to a formal proposal and review process and with a countersigned letter as an agreement between the foundation and the recipient, the terms grant, grantmaker and grantee seem most descriptive of the situation. If we were conducting a lottery to determine the recipients, handing out money on the street corner or perhaps simply matching employee contributions, then these terms might not be the most appropriate.

Christy Wilson, Rancho Santa Fe Foundation: mostly I use the terms interchangeably because in writing I am sensitive to the "over-use" of one term in any given paragraph. However, one rule of thumb for me is that any time I am referring to grants made by the RSF Foundation I always use the term grant, and nothing else.

Sheryl Winslow, Barona Casino: we primarily rely on the term "grant", although have used "support" to cover other forms of support to nonprofits

Email SDGrantmakers with specific philanthropic questions. We are happy to do a literature and web review to share the latest stats, trends, and practices.

back to top