Americans gave more than 350 billion to nonprofits last year, and half of that came from the wealthiest americans. So, what influences their giving . Ruben ramirez gets some answers. Reporter its another Typical School day at Truman High School in the bronx. The cooking class is busy in the kitchen. singing the choir is rehearsing. The astronomy class is learning about stars. But it wasnt always like this. Real estate developer Charles Bendit met truman high principal sana nasser a decade ago through a nonprofit called pencil. It connects Business People who want to volunteer with schools in their communities. I was a small businessman that was just getting started. I was just beginning to realize that someday i might be successful. I didnt have what to give in terms of big dollars, so what i did do was, i thought about how i could be most impactful. Reporter bendit serves as a mentor to principal nasser. Together, they developed the idea of specialized academies within the high school. Bendits biggest contribution sharing his decades of business experience. It all started with learning how to be the c. E. O. Of a company and how am i going to make sure my company, my school, is a Successful School and is a competitive school and can attract the best of the best. Reporter a new study from bank of america and Indiana University finds more people donating their time like bendit. Volunteer hours are at an all time high. High net worth donors cite giving their money away as one of the top freedoms of wealth. The only way you can achieve those levels of fulfillment on a personal level is to be passionate about that which you are devoting your time, your talent and certainly your dollars to. Reporter people are still donating money, giving away at least 10 of their Household Income each year, according to the survey. And most of those expect to give at least the same amount next year. And its not just about getting the tax deduction. We see that taxes are very much a consideration in how folks might structure their giving and in the timing of their gift, but they are rarely part of the giving equation in terms of why People Choose to give. Tom why give now . How to give . Eileen heisman is the president and c. E. O. Of the National Philanthropic trust. So eileen, if you have made the decision, how do you begin to decide how to give. Like cash, time or maybe some other asset . It depends on what kind of assets you have. If you have cash thats the only thing you v you might want to write a check or go online, do an online contribution. But a lot of people who are giving especially large amounts are over age 65 and a lot of those people have acquired closely held stock, appreciated securities and gifts and there are a lot of appreciated publicly traded securities. If thats what you have and youve had it for more than a year and a day its called long term appreciated assets and you can gift those and its a effective taxing vehicle. Tom when you give that other asset like a security who inherits the Capital Gains . You actually get Capital Gains for giving. So if you have Capital Gains youve got something for 10 a share its now worth 100 a share you dont pay any Capital Gains. So you actually have to gift the stock to the charity in kind. So you dont want to sell it yu want to gift it. Tom youre a pretty good investor if youre able to buy ten and gift it a hundred. What about cash though, that the most popular way to give and the most effective way to give for the charities. Well, its the most popular way to give. And charities can use it right away. But charities who can take stock actually really like appreciated securities because you can sell them right away and turn it into cash. Tom is that preferred, though, over just the cold hard cash or the credit card contribution . Well the credit card contribution is good but the Credit Card Company takes a few percent off the top. So if you think youre giving a hundred dollars online, youre really giving 97. If youre giving cash, you can give the full amount. But one of the things about appreciated securities is that donors who give appreciated securities often give larger gifts. So charitys like that and its pretty inexpensive to sell the security. The other nice thing is the donor gets to deduct the full market value of the gift. So if you pay 10 and just a hundred you get to deduct the 100 and avoid Capital Gains tax. Its way more gifting of appreciated securities than i think people really know. Tom we heard the jingle about donating your car. How about other hard assets like that. Well a car you have to be careful because a lot of times when you gift your car if its really not a great car you can only deduct what they actually sell it for. For years and years you could deduct whatever the blue book was but then they would sell it for much less so they stopped that a few years ago. Cars are easy, there are a lots of organization who will take them. If you other assets like real estate or fine art its fairly complicated. Have you to call the charity, make sure theyll accept the asset and then after that you have to figure out what its value is. Its the donors responsibility. So theres a lot more work for those other liquid assets. Tom on the part of the charity receiving that kind of asset, is it effect fective for them. It seems time consuming they thought to go out and turn that into dollars. Thats right. It can be effective if its a big asset and you have the staff expertise to deal with it. If they dont have the staff expertise, it can be cumbersome for both the donor and charity. So you really have to figure out when you give it to a university or hospital or organization that manages donor funds, some place that has sophisticated what we call plan giving expertise. Tom and finally volunteering your time. I got to think that a number of charities, local charities especially, smaller ones, very valuable. Very valuable. About 25 of americans donate their time. Its actually worth about 169 million to the American Charitable organizations that get it. So its very valuable. You have to pick an organization you like and you have to make sure you stay there for a while when you volunteer because they train you and you become accommodated to what they do. If you do get trained and then you stop going, then they have to take the time to train somebody else. So if you are going to volunteer, just stick with the charity for a while. Tom make that investment in you. All right. How to give tonight with Conscious Capital, eileen heisman is the president and ceo of the national trust. One of the things that comes out of anyone in the taxi determine community is their self worth. It pickles your heart, your head and your mind and it connects with others and it make us get really really connected. Its human nature. Thats right. You can give back and it extends my heart. It extends my heart and the feeling i have. The purpose, making a difference in my life and also in the lives of others. Susie one of every 4 that will be given to charities this year will be donated in the last two months of the year during the holidays. But you dont have to wait until then. As Ruben Ramirez reports, theres a new resource helping donors connect with charities making a difference in the communities they serve. I was feeding Homeless People in Grand Central terminal everyday. I did that for two years, 700 nights in a row. Through that process, i got to know an awful lot of homeless folks, and i kept on hearing over and over again that while they appreciated the sandwich, what they really wanted was a room and a job to pay for it. Reporter George Mcdonald listened and started the doe fund in 1990. Its mission get homeless men off the streets of new york by providing housing, job training and jobs. And it works. Graduates of the program are far less likely to find themselves back on the street. Mcdonald runs doe much like a forprofit business, measuring Program Success along the way. There are 1. 5 million registered 501 c 3 charities in the u. S. , but finding those that have the biggest impact in the communities they serve isnt easy. Large charitable foundations, much like institutional investors, do their own research, but its more challenging for individual donors. The global Philanthropy Network started the social impact exchange, a group made up of nonprofit organizations and nonprofit experts. They came up with something similar to a stock index called the s i index, for social and impact. Only, instead of publicly traded stocks, its made up of the Top Charities in the country with a proven track record. The doe fund is one of those. If we couldnt measure it, it wasnt worth doing for us. Reporter at s i100. Org, donors can search organizations in their communities, review growth plans and program metrics. If you really want to have confidence that youre going to help a child learn to read or move a single mom out of poverty or graduate kids from the toughest neighborhoods of high school, these are the organizations that have proof that theyre doing that. I wish that we, as a society, had a mind to reward programs that actually produce results every day of the year. Reporter Ruben Ramirez, n. B. R. , brooklyn, new york susie speaking of results, our next guest says the majority of charities in the u. S. Are poorly managed and fail to deliver on their promises to donors. Ken stern is the former c. E. O. Of National Public radio and author of a new critical book called with charity for all. I began our conversation by asking ken why charities are failing. Are incentivized to do the thing that donors want which is invest in storytelling, invest only in services. They are not doing things necessary to build great organizations, investing in research, infrastructure, new services and new strategies. Without those things we all know what creates innovative organizations. The exact opposite of what most charities are doing because thats what their donors are asking to do. Susie can you say in the book we live in a society oriented whether it returns in stock portfolio or a simple score. But when it comes to Charities Donors arent asking are the moneys going to the right place, are we reaching our goals, why is that. Its an amazing fact, susie, that theres a lot of social science on the derma psychology and the vast majority give to wellknown brands, they give to friends charities, they give back to the organizations that they went to school with or was treated at. Only a tiny fracture of them think of themselves guy a high impact that gives to organizations to make the most difference. Its just not part of the donor psychology now. Theyre not investors, theyre donors. And until they think about themselves as investors, the charitable sector is going to be marked more by anecdote than actual evidence base. Susie how do you measure that. We know a lot of people work very very hard for these. They are inspiring anecdotes about what theyre doing. So how do you prove that youre making a difference. I actually dont have that much of charities in my book. I ask that they start to measure, to set goals which most of them dont. To actually then establish goals for the organization and take the research to do it. There are plenty ways to measure results for charities. The key here is actually getting and be trans parent and accountable towards some goals they set for themselves. Susie what about bill gates and the Gates Foundation because hes come up with new rules that had rigorous measurement standards. Do you think this could become the new rule for nonprofit. Charities are responsive to market pressures like anyone else. Donors are represented by gill bates bill gates one of the largest donors in the world, biggest donor to the charitable world by far starts demanding accountability and results, the charitable will respond. Thats what we need in order to have a more effective charitable sector at a time of greater need. Susie what is bill gates doing the other charities arent doing. They invested an enormous amount of resources into measuring benchmarking all their grantees, an entire department. Nothing but research and measurements. A number of foundations do that, the federal government does it, many other foundations dont and certainly individual donors dont. Theres more we can have like the Gates Foundation better off well all be. Susie you make in your last chapter of your book a number of recommendations how to reform the system. What would you say is your key recommendation. To individual donors, i would stop thinking about stuff as donors think of yourself as an investor. Average family puts 2700 in the charities spend more time watching tv this one day than they do in researching charities in one year. Change the mind set, change the culture. Time is extremely valuable and we sometimes dont realize the skill set that we inherently have and things that may come very easy to us are very difficult for organizations or for others to conquer, like for instance an email campaign or a newsletter. Dont get me wrong, its very important to have people who coordinate volunteers and to keep things going but i like the idea that everybodys contributing together and theres a sense of community with the volunteers. But you dont always get to see where they spent 9 check. Tom while many of us may drop coins into Salvation Army buckets during the holidays, there are ways investors can contribute to their communities and make money, too. Its called social or Community Impact investing. As Diane Eastabrook reports, this trend is providing a financial boost to many cash strapped neighborhoods. Reporter philanthropy is a way of life for university of chicago senior thomas george, guiding his career goals and investment choices. If my money isnt going to be working for something that i dont actually believe in, then im not interested. Reporter last summer, george bought a 500 Community Investment note from Calvert Foundation. His money is helping finance organizations like growing home. So, these are good. Reporter growing homes an urban farm that puts the chronically unemployed to work producing fruits and vegetables in one of chicagos poorest neighborhoods. Community investing is a growing trend both here and in europe. It allows investors to take a financial stake in their communities to improve housing, fight crime and even add jobs. Reporter Community Investing works a couple of different ways. Social impact bonds raise capital to achieve a social goal like keeping exoffenders out of jail. If the program succeeds, investors make money. Community investment notes raise capital for organizations that have a revenue component. If the Organization Makes money, so do investors. Growing home got a 50,000 loan funded by Community Investment notes to build two new hoop houses for growing vegetables. The group makes money selling produce to farmers markets and restaurants. We expect to be able to pay it back fairly quickly. Were going to make about. Next year, about 30,000 in income on just what you can see there. Reporter Calvert Foundation says it only loans money to organizations with a solid track record. Were looking at very traditional measurements for credit quality, things like liquidity, how strong an organizations operations are, and how strong and long their track record has been. Reporter investors can buy notes online from calvert for as little as 20. Investments over 1,000 can be purchased from a broker. The Interest Rate on a oneyear note is 0. 5 . Its 2 on a fiveyear note. Incapital underwrites calverts Community Investment notes. Chairman Thomas Ricketts says now that Financial Advisors understand these products are as easy to purchase as any other bond, theyre recommending them to more investors. In certain years, the Interest Rate would be much lower than what your alternatives were. But right now, you get pretty much a market return plus the added benefit of a social return. Reporter Community Investing, like any financial product, carries risk. Organizations might not be able to repay loans. Calvert says its loss rate is only 2 , but it has a cash cushion to assure any investor who takes a stake in his or her Community Gets repaid. Diane eastabrook, n. B. R. , chicago. Susie diane has more now on how those Community Investment notes are creating jobs in one of chicagos poorest neighborhoods. Reporter this looks like an ordinary store on the outside, but inside its something else. The nonprofit stewards market is three businesses in one. Theres king lizzy, a boutique specializing in urban tshirts, hats and custompainted sneakers; a Recording Studio for budding hiphop artists; and a business that washes and refills soap and shampoo bottles for hotels. All three provide jobs for at risk teens and young adults like shevelle walton. I was looking for a job probably for, like i say, about a year straight. Reporter former futures trader Rowan Richards started the stewards market six years ago. Whats the background on that shoe going to be . Reporter even though sales topped 50,000 last year, richards says he recently had trouble getting a loan to expand. We didnt have enough track record a lot of times, you know, and people didnt fully understand who we were, okay, nonprofit, thats also doing business. We want to see a little bit. Come back and talk to us later. Reporter the stewards market eventually got a 50,000 loan thanks to Calvert Foundations Community Investment notes. The notes work like bonds and let individual investors finance a variety of Community Programs from Affordable Housing to job training. The stewards market provides opportunity in an area where very little opportunity exists. Unemployment in the humbolt park neighborhood is about 14 , and many families in this neighborhood have been struggling with poverty for generations. Reporter Calvin Holmes heads the Chicago Community loan fund which distributes financing from calvert to local organizations. Holmes says the groups dont need to have spotless credit histories, but they do need solid business plans. We have a Compliance Monitoring Team that meets with our customers on a regular basis, and were always trying to help them not only get to the finish line, but to be successful as an organization in the long haul because the goods that they provide and the services they provide are so important to us. Reporter Diane Eastabrook, n. B. R. , chicago. What drives me is really just like the basic elemental principle that every single one of us has a desire to be kind and of service to somebody else. Everybody has something to offer, whether you as a volunteer is the person or that person can truly offer something to you, you know. And i just think that thats very important especially nowadays that we are very caught up with like computer. I think its so important to have that oneonone with somebody and what better way to volunteer it. Tom is running a profitable business a decision between whats good for investors but bad for employees or the community . John mackey does not think so. He started Grocery Store chain Whole Foods Market in texas in 1980 with one store. Today, he has almost 350 stores and a Company Worth nearly 18 billion. Hes also the coauthor of Conscious Capitalism. We recently spoke with him about that business philosophy. Companies that produce necessary but possibly harmful products like pesticides or even military weapons operate under a Conscious Capital model . Its an excellent question, and im possibly in some cases, people might decide they cant work under those conditions if they make the decision that this is causing more harm than good. But its not my position to make that decision. I think each individual needs to. But i mean, if theyre contributing, i mean lets take, i mean i think Defense Companies are, theyre creating weapons but if they could feel like sincerely that thats wenting make their nation safer, and that would in a sense be a higher purpose to it. Pesticide producers which say well were really trying to make a higher purpose there. We want to make less toxic pesticides that still protect our agricultural coopts from insects and so they work hard to make less toxic pesticides that also are still effective. So i think its really about thinking through the value that youre creating and what the consequences of that might be or the unintended consequences in trying to lessen that. So you create value for all of those major stakeholders simultaneously. Customers, employees, suppliers, investors. And communities. Tom whats interesting you talk about value thats coming from within, not external value, not financial value but really almost Intrinsic Value on the part of a company and its leaders. Yes, thats how i see it. Tom does a Conscious Capital company ever fail . Im sure that they have because i think this is being more conscious business does lead to competitive advantages and usually success in the marketplace. I dont think it guarantees it. You can still make bad decisions, bad Strategic Decisions that can wreck your business. And also sometimes theres just major technological changes that you could have been the most conscious type writing company in the world but when personal computers came along, your Business Model might have been obsolete and we might have gone out of business. So it doesnt guarantee it but it does increase your chances for success i think remarkably. Tom john, i want to ask you about what happened several years ago, you using an alias on an internet message board credit sizing a rival company that you wound up buying. How does that square with your philosophy as a Conscious Capitalist . It squares with it pretty well because i dont think thats ever been reported accurate lee by the media or i dont think its ever been really studied. I did post for about eight years on the message board. I occasionally criticized some of our competitors. I occasionally criticized Whole Foods Market and im actually proud of what i wrote on the message boards. I have a screen name to be sure but so did everybody. That was the culture of the financial message board. To me it was just a game. I was just having fun doing it, i have no ulterior motives of trying to harm anyone. Indeed, how could somebody writing under a scream name actually harm anything. Nobody pays attention to that stuff its having good arguments with people. Its been greatly he can acknowledge rated in terms of how many exaggerate in terms of a competitor. In terms over wild oaths i started posting on the board before we started talking about the merger because i lost a bet and i had to get off the board. In no way was i trying to effect wild oat stock price. Much of thats been distorted, kind of like a smear in a lot of ways. Tom we know that betting is squared with you as Conscious Capitalists and at least you can take a gentlemens bet it sounds like. It was a gentlemens bet and i lost and i honored the best. But i wish i lost that bet a few years oral. Yours earlier. Tom tom mackey, owner of whole foods and author of Conscious Capitalist. Susie for more on companies and social responsibility, go to www. Nbr. Com. Our nbru partners at Harvard Business school have a new working paper on this. Its called why every Company Needs a social responsibility strategy and how to build one. Youll find it under the nbru tab. And thats nightly Business Report for monday, february 18, president s day. The markets reopen for trading tomorrow. Have a great evening, everyone. You, too, tom. Tom good night, susie. Well see you online at www. Nbr. Com and back here tomorrow night. Captioning sponsored by wpbt captioned by Media Access Group at wgbh access. Wgbh. Org join us anytime at nbr. Com. There, youll find full episodes of the program, complete show transcripts and all the market stats. Also follows us on our Facebook Page at bizrpt. And on twitter bizrpt