General Ramblings: An Endorsement

October 1, 2009       Paul Clolery      

Alan Khazei, the 48-year-old founder and CEO of Be the Change, Inc., co-founder of City Year and pied piper of the ServiceNation Summit, has said that he’s considering running for the U.S. Senate seat from Massachusetts vacated due to the death of Sen. Ted Kennedy.

Whether he wants the help or not, here’s his first endorsement. Given he was one of the key players in getting the Edward M. Kennedy Serve America Act passed and signed into law, there probably is nobody more fitting to take the seat.

Khazei is national service to its core (and corps). A shrewd political tactician, he’d be perfect for the seat and a friend to the charitable sector.

The race is shaping up to be a battle but the network of people he has helped coordinate over the years makes for a ready political team. Founded in 1988 with 50 young people in Boston, City Year now operates in 18 U.S. cities and in Johannesburg, South Africa with an annual budget of $60 million and more than 1,500 young adults serving 100,000 children annually.

Even though a freshman United States senator is just one vote of 100 and he’d have low-ranking committee positions, Khazei still would be able to help maneuver legislation important to charitable funding and contracts with the federal government. He’d be a pit bull when to comes to saving the charitable deduction.

He has been quoted as saying: “My life has been about public service. I have to look at this seriously.” It’s a different world from the outside looking in. Khazei can make a real difference from the other side of the table.

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The numbing financial numbers, losses in foundations and endowments, are continuing to hit the news. But it is hard to feel badly for Yale University, which announced its endowment had fallen to $16 billion. Based on the GivingUSA numbers released this past June, that’s equal to 5.2 percent of all giving in the United States during 2008.

Granted that money was not accumulated in one year, but it begs the question of how much is too much? And, at what point will legislation come along to cap what a tax-exempt organization can have in the bank?

The storied university had operational expenses of $2.3 billion. The endowment would cover operating expenses for 6.9 years without another drop of income. Yale College’s 5,300 students pay $45,000 annually. And, yes, many receive financial aid in tuition and board. But for fiscal 2008, according to the university, “operating revenues exceeded operating expenses by $34 million. The largest source of operating revenue was generated from the endowment, which represented 36% of total operating revenue.”

Yale takes the long view and plans to be in operation for centuries, not decades, according to its report. That’s great. It’s a wonderful educational institution that contributes much to the nation. But, could it stand just one year of its alumni giving elsewhere during these challenging economic times? The answer to that is yes.

Yale, and Harvard University with its $26 billion endowment, should be leaders and encourage alumni to look elsewhere for a year. Sure, that goes against every rule of fundraising. But, it could serve the broader interest of the sector. As cities and states seek revenue in these sweaty economic times, cool pools of $16 billion and $26 billion look very cool and inviting. It’s just a matter of time before governments determine that “charities” are hording cash and come after the sector. NPT

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