More detail on executive pay

The Securities and Exchange Commission is my very favorite part of the federal government; they’re the only ones that ever try to make my job easier.

Their latest move is a proposal to overhaul and tighten the requirements for disclosure of executive pay. In the wake of the Enron and New York Stock Exchange scandals in which bloated pay packages became a controversial issue, the SEC’s new chairman, Christopher Cox, wants to limit companies’ ability to conceal the value of perks and option packages.

The New York Times said, “The proposal would for the first time require public companies to provide a figure of total compensation, including significant perks, stock options and retirement benefits for the chief executive, the chief financial officer and three other top-paid officers, as well as all directors.”

The changes will be approved this year, for implementation in the 2007 proxy season. Analysts doubt that executive pay will decline much after the changes are made, because while stockholders may be outraged, there’s not really much they can do about it.

On the other hand, any move to make the impenetrable prose of proxy statements a little more clear is a boon to prospect researchers. So thank you, Mr. Cox!

Business References

Today’s discovery is a useful site called Reference for Business. It includes four databases: the International Directory of Business Biographies; the Encyclopedia of Small Business; a collection of Business Plans; and the Encyclopedia of American Industries.

Probably the most useful to a prospect researcher is the International Directory of Business Biographies, which includes relatively detailed biographies of business leaders all over
the world, organized alphabetically. Most start with a directory-style listing of birthdate, educational information, and career history, then move on to a longer prose article that goes into greater detail and places the individual in the context of corporate history, plus links to additiona lsources, and often, a photograph. The inclusion of individuals at companies across Europe and Asia makes this a particularly useful source.

The Encyclopedia of Small Business lists business terms alphabetically with brief definitions; most connect to a longer article that provides a more thorough understandng of the term. Use The Encyclopedia of American Industries to find SIC and NAICS codes for different industries, as well as industry snapshots, background and development, trends and industry leaders. This is helpful when you need a larger context to judge a company’s position and potential. The fourth database, a collection of sample Business Plans, is at first glance the least useful to researchers, and is poorly organized; also, the search function does not appear to work in this database. But if you’re looking for an understanding of how a particula r type of business is organized—the different expenses and sources of income faced by a record label or a travel agency, for example—these sample plans provide an impressive level of detail.

Conference Convergence

Back (though not fully unpacked) from the APRA conference, which by any standards was a big success, with more than a thousand attendees. I met some great people, attended some highly informative sessions, and even got to see some of San Diego. Steven Hupp and I talked about blogs and how researchers and nonprofits can, and should, get into this rapidly expanding sector of the web.

Three cheers to Elizabeth Crabtree, who not only organized this entire extravaganza, but presented a wonderful session on venture capitalists, investment bankers and hedge fund managers, a group of people who combine creativity and energy with extraordinary incomes, making them wonderful prospects. I was thinking about these folks this morning as I got back to work, and lo and behold! I ran across an article that mentioned VC blogs.

Yes, there are a few venture capitalist out there in the blogosphere, and their blogs make for interesting reading. A good place to start is VentureBlog , which has been around since February 2003 and includes posts by several venture capitalists. The topics vary from what do venture capitalists do all day? to the startup ecosystem, a look at why startups tend to cluster geographically in places like Silicon Valley. Links include a list of other VC blogs, posts sorted by category, and “What We Read.” I surfed around these links for a while and found some great posts (not necessarily recent, but still useful!) on VC basics, including Joi Ito on the investment process and David Hornik (he's an investor at August Capital and one of VentureBlog’s most frequent contributors) explaining the terminology of venture capital financing.

If your prospect pool includes venture capitalists (and if not, why not?) and you want to learn more about the world of VC, reading their blogs is a great place to start.

Con Blog! Greetings from San Diego

It's sunny and lovely here in San Diego where I am attending the APRA conference with a thousand of my dearest friends and colleagues. The hotel is large and elegant (very large, but I'm happy to report that I've only gotten lost once) and I have attended some excellent sessions: Napoleon Hendrix on stewardship and donor relations, and Diane Crane on data mining.

Interestingly, the same buzzword came up in both sessions, and that buzzword is: SURVEYS. Have you surveyed your donors lately, and if not, why not? Napoleon (who, by the way, has the coolest name ever!) made the point that people love to be asked for their opinions, which means that surveys have a cultivation function as well as being a source of information. Diane noted that the simple act of responding to a survey is a data point in itself, in that it shows a level of interest in your organization.

Am I sensing a trend? Is the process of research going to shift to a more interactive model? I'm co-presenting, along with Steven Hupp, about blogging tomorrow, and I'd already planned to stress its potential for two-way communication with constituents. Is your communication strategy working? How do you know? Information is like contributions--you're more likely to get it if you ask for it.

Hmmm...food for thought. Right now, however, I can see the hotel pool from my window, and if I listen closely, I think I can hear it calling my name.

Having a wonderful time, wish you were here!

People who know people

I ran across a quirky little resource in my web travels recently. NNDB.com is a who’s-who type database of prominent individuals, or as it describes itself “an intelligence aggregator that tracks the activities of people we have determined to be noteworthy, both living and dead.” While it does skew heavily toward celebrities and showbiz types, I’ve also found politicians and businessmen there, and even a few notorious criminals. What makes NNDB different and potentially interesting is its focus on documenting the connections between people. So an entry may list past romantic interests, with links to their profiles. Even more useful are the institutional lists: clicking on West Point in the late General William Westmoreland’s profile leads you to a list of West Point grads in this database, while the entry for Cat Stevens not only lists his birth name, but a link to a list of others who have converted to Islam, and to those who share his Swedish ancestry.

The tone is frankly gossipy---each entry includes not only such basics as birthdate, photo, and name(s) of spouse(s), but also sexual orientation. The ‘executive summary’ for each person may be serious or flippant (Timothy’ Leary’s reads simply ‘tune in, turn on, drop out’). NNDB is still far from living up to the claim of “tracking the entire world” made in its headline. What’s available now is a beta version with about 14,000 profiles, and very basic searching capacity. But the information seems pretty accurate, and the connections are intriguing.


Can it be August already? See you at the APRA conference!

HyperWealth

The New York Times calls them the “hyper-rich.” On Sunday, June 5, the latest article in the Times' fascinating series on class in America discusses the wealthiest of the wealthy: “the top 0.1 percent of income earners - the top one-thousandth… about 145,000 taxpayers, each with at least $1.6 million in income and often much more.” The average income for this group was $3 million in 2002, the most recent year for which data is available.

The article discusses how the Bush administration’s tax cuts affect this group, and the much greater affect of current tax laws, especially the alternative minimum tax, on the “merely rich”who pull down six-figure incomes. Tax-wise, the Times explains, it’s much cheaper to get your income from investment gains and dividends than it is to earn a similar amount.

The entire series is fascinating, not to mention alarming in its implications. The gap between rich and poor is increasing, and it’s getting harder to cross that gap—at least moving upward, though the middle class is finding it easier to slip into financial struggles or bankruptcy.

For those of us who are professionally interested in the hyper-rich, today’s article is worth clipping.

Beyond the checkbook

Collaboration , involvement and control look like a continuing trends in philanthropy, as evidenced by a couple of recent news stories. Last week, the Indianapolis Star highlighted the popularity of giving circles , particularly among women. Small groups of friends and associates meet to pool their philanthropic budgets, learn about giving opportunities, and jointly make gifts. This collaboration offers donors a larger impact and a more satisfying experience than individual donations , and probably stimulates more enthusiasm and involvement in philanthropy. Giving circles vary widely, from small groups of friends (even children have formed giving circles) to professional networks, and the amounts they contribute vary just as widely.

A recent report by New Ventures in Philanthropy indicates that giving circles have contributed $44 million to various nonprofits nationwide over the past five years. Three quarters of the giving circles they surveyed have an ongoing relationship with, or are “hosted by” an established nonprofit organization, frequently a community foundation.

Are there giving circles in your community? Do they know about your organization and its needs? Could this be a vehicle to get your constituents more involved—and perhaps, to help your best volunteers bring new donors into the fold? The Giving Forum has more information about what giving circles are and how to start them. It’s worth a look!

Venture philanthropy is another method by which donors have taken a more active role in supporting the nonprofits they care about. Social Venture Partners, the network of donors launched in Seattle eight years ago to bring a “venture capital” model of involvement to their giving, has taken another step. Today, they announced a partnership with Foundation Source, a private organization that provides back-office support services like administration, compliance monitoring, federal and state filings and grants management to private foundations, serving donors who want the simplicity of a donor-advised fund without giving up the control offered by a private foundation. Now, the donors affiliated with the more than 300 foundations that are Foundation Source clients will be encouraged to follow the SVP model of active engagement with the organizations they support.

I define cultivation as the process of getting donors interested in and enthused about giving. The spread of giving circles, venture philanthropy, and mechanisms that make giving easier are all forms of cultivation—as researchers, we need to be the final link, bringing these newly aware and enthusiastic donors into contact with the organizations we serve.