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I have had five thoughtful conversations in the past week with donors who are struggling with the question, “Should I give for endowment?” Since the year-end is a time we reflect on our values, our goals and our legacy, it is appropriate to devote my year-end blog to the ultimate expression of these values—endowment building. What are the pros and cons of giving for endowment?

Endowment Pro: A well stewarded endowment pays dividends forever, whether its focus is the arts, health, human services, the environment, education or simply to meet the changing needs of the community. Contrast this outcome with gifts for new structures, new exhibits and new programs, all of which provide important present benefits but require future expenditures for maintenance and ultimately replacement. How many capital campaigns renovate distinguished buildings of an earlier era for many times their original cost in an effort to adapt to changing usage? A capital gift meets a present need but imposes a future cost, while giving to a well managed endowment is truly a gift that keeps on giving.

Endowment Con: “This concept is fine in theory, but endowments can be hoarded, mismanaged or expended by boards that simply ignore donor intent. So, I would rather my money be spent on something I can physically see like a campus building that has students passing through its doors daily.”

Observation: Some endowments are unquestionably mismanaged. Most frequently, mismanagement comes in one of two forms. Endowed organizations are constantly tempted to dip into their endowments to meet current needs, even though that wasn’t the donor’s intent. Also, many nonprofits are not expert at managing endowment for long term performance. This is why third party endowment experts like community foundations are needed to ensure that donor intent is honored and to give the donor the highest probability of solid investment management over long periods of time. (In order to maximize long term investment performance, The Community Foundation Serving Richmond and Central Virginia partners with the University of Richmond—one of the best managed university endowments in the country—to invest its endowed funds.)

Endowment Pro: Think of endowment as “retained earnings” for nonprofits. Retained earnings enhance a business’s financial stability and provide it the flexibility to seize new opportunities. Nonprofits generally expend all their resources each year, but they have similar needs for financial stability and for risk capital to respond to changing needs in creative ways.

Endowment Con: “I hear you, Thalhimer, but I earned this money that I am giving away, and I want to see it put to work during my lifetime. I see the problems today, and I want to help solve them now. What happens in the future is somebody else’s problem. If I can fund a promising research project or meet a pressing need, then that’s where I’m going to give my money. ”

Observation: Both arguments have validity. Donors choose to what extent they will give for projects today and whether they will also provide endowment for ongoing support. Philanthropy is a personal choice and is maximized in the aggregate when donors with diverse giving philosophies follow their passion.

Concluding thought: If we fail to endow the contemporary causes we support for their operating, programmatic and capital needs, then the next generation will have to replace our level of giving (and maintain the structures we have built) just to maintain the status quo. Progress and real systematic change can only be made over the long term if we build the financial capacity of the nonprofit sector through endowments so that new money raised can be used to address new needs.

Happy holidays to all of my readers, and best wishes for a year of good fortune and good deeds in 2012! My next blog will be from New Zealand in mid-January. Cheers!

What was your favorite place? This question gets the award for the most frequently asked upon our return from Asia to Richmond. So, you would think that after two weeks I would know the answer, but I don’t. A broad educational experience simply doesn’t lend itself to sound bite responses. However, I will do my best to mimic Richmond Magazine’s “Best and Worst.”

For natural beauty, it is difficult to best Hawaii; although Japan’s mountains, lakes and gardens come very close.  If I had to choose to live in Japan, China, Vietnam, Cambodia or India, then Japan would win hands down. In addition to natural beauty, the people seem gracious and polite, orderly, clean, welcoming and spiritual.

For economic importance, China astounds. Its government operates seemingly with singularity of purpose—to replace the United States as the most powerful economy on earth. By sheer numbers and the seeming ability to maneuver its people however it wishes, this outcome is not only probable but will likely occur sooner than western experts think. The economic engine of the world has shifted eastward, and Asia is anchored by the Chinese. It will be interesting to observe whether an apparently imminent bursting of the real estate bubble and local stories about their usurious underground banking system delay this inevitability in any meaningful way.

For the best food, I would choose Vietnam. Their Asian flavorings are influenced by the historical presence of the French, and fresh vegetables abound. Cleanliness is less of a detractor than it is in China, where we never felt we could lower our guard in restaurants. Japan wins the award for cleanliness, and its sushi is fantastic. But, after a while you just need a break from raw fish. It amused us to see sushi offered in other countries, where one would be taking one’s life in one’s hand eating anything uncooked!

Cambodia was the most exotic locale we visited. Driving through flooded streets and seeing how orderly life continues for most people instructed me not to over-react to everything I read in the newspaper. While this year’s floods were extraordinary, the rivers flood annually during the monsoon season and people are used to it. Cambodia’s poverty is palpable, and it stands in stark contrast to the glorious civilization in the 12th century that its magnificent ancient temples reveal. The killing fields and land mines are a part of their recent past and present reality, respectively, and yet one senses that this country is emerging in the interest it holds for adventuresome travelers.

India was the most important country we visited because of its contrast of richness and poverty, its blending of the world’s major religions and cultures, and the blossoming of its youthful culture within an environment that is steeped in strict tradition and mired in bureaucracy. For millennia the world’s cultures and religions have co-existed at this crossroad between East and West, yet the dominant Hindu culture prevails. The haunting soulfulness of Varanasi and the weightless beauty of the Taj Mahal delight despite the distraction of ever-present filth. Amazingly in India the ground is one’s trashcan, the rivers are open sewers, and close to half the population is locked in poverty. Yet, the future is bright as an emphasis on education, particularly in the south where there has been a strong Catholic influence, is unleashing a technological powerhouse. The mix of old wealth, new wealth and extreme poverty provides a breeding ground for philanthropy, which we did not witness in any significant way in the other countries we visited.

How have my views changed? I am more of a free market economist and more strongly (if that is possible) in favor of free and open trade. The U.S. has to accept that labor is cheaper in other countries and that the economic center of gravity is shifting eastward. Education and technology are leveling the playing field worldwide, but these are areas in which the U.S. has a competitive advantage. We need to embrace that advantage and compete for our share of emerging wealth, rather than construct barriers in what will ultimately be recognized as a fruitless effort to preserve the past world order. I am convinced that education is the only effective solution to poverty over the long term.

I am more of an environmentalist, having witnessed how the Chinese sacrifice the purity of their air and water with abandon in their pursuit of economic growth. Similarly, India’s blatant disregard for “Mother Ganges” and its trashing of the earth’s surface made me long for the relative cleanliness of the James River. If only the land of Gandhi could produce a Ladybird Johnson!

I am more of a pacifist. The juxtaposition of Pearl Harbor and Hiroshima in our travels was saddening in a way that continues to haunt me. The horrors of the Vietnam War were revealed from the other side’s perspective, leaving me torn between my admiration for our heroes who answered the call to duty and my heightened disappointment that our leaders unleashed chemical weapons on the Vietnamese people and their environment. The peace movement, which seemed mostly flighty and irresponsible to me at the time, now seems to have had at least a valid point of view. I return both cognizant of the need for national security and hesitant to support using our power beyond our borders except when absolutely necessary.  Travel makes one more aware of how our actions are perceived from the perspective of others.

I have come to the realization that governing is a messy business EVERYWHERE. Every country we visited is fighting corruption. We heard over and over how inefficient and bureaucratic each governmental system is. In the U.S., our government seems to get it right as much as any, despite the daily acrimony that dominates the press. The one exception is that our travel companions from Canada and Australia seemed universally pleased with the quality and cost of health care in their countries, so that is something to which we should aspire.

I expected to return ready to invest more in emerging markets, but such is not the case. India is the exception, as they have a younger demographic than their Asian peers, a strengthening commitment to education and a system of government that is least oppressive. However, now I more fully recognize the stability and strength of the U.S. economy and its currency. Our challenge is to eschew deficit spending before we forfeit this most important competitive advantage over our worldwide competitors.

Travel breeds humility. After being among half of the 7 billion people on this planet, it becomes obvious that no one point of view will dominate on the world stage for very long. The ability to extend one’s influence over time on a playing field increasingly leveled by education and technology hinges on one’s willingness to engage with others creatively and respectfully. Leadership has to be earned, and it can be forfeited by a single misguided decision.

Nevertheless, it is impressive how resilient we all are. The Japanese have rebuilt Tokyo seven times, most recently from the firebombs of World War II. Today, the Japanese view Americans as their closest allies. The Chinese are flourishing following occupation by the Japanese up to World War II. The Vietnamese welcomed us seemingly without hesitation.

Education is a lifelong endeavor. We need it to enter our chosen professions. We need it to refresh our skills in an ever-changing workplace. We need it to stave off the inevitable narrowing of our experiences and perspectives as we age. As I prepare for the next leg of our travels in New Zealand and Australia, my mind is newly opened to how much I don’t know.

Before me in the synagogue were hundreds of people—classmates, teachers, parents and the Rabbi—politely listening to yet another confirmation speech. Only I spoke not about a customary aspect of the Jewish faith; rather, I compared the Jewish concept of death and the afterlife with the traditions of other faiths. Eyes opened widest as I described the Hindu funeral pyres by the Ganges River, where the ashes are subsequently spread into the very same waters that people bathe, wash clothes and worship the morning sun.

In Varanasi, the images I had described cursorily in black and white 43 years ago burst forth in an array of color, sound, smells and emotions. This is a city where people come to die, and they also daily celebrate life by bathing in and praying beside the Ganges.

In the evening, we reveled with many hundreds of people also floating on boats in the river to view thousands more gathered along the bank to hear the ancient chants of 7 priests as they “put the Ganges to bed” for the night. Before dawn, we boarded rowboats to watch the morning rituals of the local people and Hindus on pilgrimages from various Asian countries. Some people meditated, some prayed in groups and others prayed before shrines. Everything occurs amidst shocking scenes of poverty and sounds of a hectic yet exotic culture.

My thoughts are consumed with the meaning of this place, which is the holiest of holies for Hindus and Buddhists. Buddha gave his first sermon here, so this is the religion’s birthplace. Groups stream in to pray with a monk at the site where he spoke, which is marked by a stupa (large ancient sandstone monument) surrounded by the remains of a temple and other structures. Varanasi is like Jerusalem and Mecca in one location.

I am most struck by the similarities among religions, notably Hinduism and Judaism, which unexpectedly seem to have borrowed from each. One can imagine people from the East and West intermingling here through millennia. During the evening service, priests blew an incredibly long blast on conch shells, which sounds much like a tekiah gedolah blown on a shofar (ram’s horn) during the Jewish High Holy Days. The six pointed star and the swastika are frequently seen Hindu symbols. The Hindu God, Shiva, is the patron of mourning, and in Judaism it is customary to sit shiva while mourning. The entire evening service involves fire, incense and captivating chants, which except for the lack of the Hebrew Language was reminiscent of the Havdullah Service, which closes the day’s prayers.

After leaving Varanasi, we flew to Khujaraho, where we had a very different ancient Hindu temple experience. What a difference the gods Shiva and Krishna make! This turn of the millennium temple is covered with magnificently preserved sandstone carvings, the most dramatic of which demonstrate the positions of Karma Sutra. Sex sells, as our group bought a record 50 souvenirs. We only have 20 people in our group, so we will have some enlightened family and friends! These people had a good time back in the 11th century before they dealt with dying.

This blog would be less than honest if I didn’t describe the filthy conditions here. We saw raw sewage flowing into the Ganges (the treatment plant wasn’t working) just upstream from where people were swimming and washing. The streets, countryside and railroad tracks are littered with trash. People sweep the sidewalks in some places, but leave the dirt and trash in piles, where animals rummage. Nobody seems to care.

Yet, this is the reality of India. Contrasts. Beauty and repugnance. Grandeur and abject poverty. Modern airports and narrow, pitted roads for highways. Serenity and stifling bureaucracy.

Before I left Richmond, a friend told me that India would be the most disturbing and most rewarding part of our journey to Asia. As I anticipate tomorrow morning’s sunrise at the Taj Mahal, I have to say that he was right.

Rain pelted us through thick vegetation, as we wound through the jungle on dirt pathways.  Gunfire resounded and thunder sounded like bombs. The scene was eerily reminiscent of a time in Vietnam when the gunfire was not on a rifle range and the bombs were real.

Cu Chi is known for its 160 miles of tunnels on three levels, which were home to the Viet Cong during the war. We crawled through tight spaces and we learned how people lived, cooked and mobilized beneath U.S. positions. We observed how booby traps were designed to ensnare and spear American soldiers with sharpened bamboo or metal remnants from exploded bombs.

The forests are actually new since the war, as the area was mostly defoliated by Agent Orange and other means. The Vietnam War is sickening to recall for either side.

Whether fair or unfair, balanced or unbalanced, it is a fact that Americans are portrayed in Vietnam as having been ruthless aggressors. As tourists, however, we felt no animosity. Relations have normalized between the two countries, and the Vietnamese people we met treated us graciously and respectfully. We found their food to be the best we have experienced since Japan, and the nighttime scene was vibrant.

Our lasting impression is the orderly chaos of 4 million motorbikes streaming in all directions without incident. A car ride transforms into a thrill ride, and crossing the street is an act of faith.

The Kingdom of Cambodia stands in stark contrast as more of a third world country. Poverty and disease are evident, and there is much less industrial development. We have avoided visiting the killing fields, having had our fill of wartime remembrance in Vietnam, but the aftermath of mass murder is palpable.

Our focus has been on the magnificent ancient temple ruins at Angkor War and Angkor Thom. What amazing architecture and carvings were achieved by these religious people 800 years ago, when the Cambodian culture was one of the world’s most advanced and powerful! We must have snapped 1,000 photos of one remarkable view after another, beginning with a hallelujah sky at sunrise backlighting the temple.

Flooding is a huge issue. We drove through deep water and stepped onto a raised block to stay dry as we entered our hotel. People proceed through their daily lives, although half the rice crop is ruined and tourism is way down. This country can ill afford this kind of setback right now.

Philanthropy and international aid are helping. Free children’s hospitals established by the Japanese and the Swiss lead an international philanthropic effort that we have not seen in other Asian countries. The Germans and the Americans are helping to restore the ancient temple sites, which are attracting millions of tourists and helping the economy.

A visit to Indochina would be incomplete without a cultural experience, so yesterday we meditated with a monk. All of our yoga skills came into play as he led us through the meditation and then explained its role in the Buddhist faith. We subsequently had breakfast together and talked about the plight of the people here.

Then, soundlessly, he removed his vibrating cell phone from beneath his robe and took a call, and he apologized that he needed to get to his next appointment. The coup de grace came when he reached into another fold of his robe and produced a business card from his NGO (non-governmental organization). A monk with a cell phone, business card, email address and website. The world is indeed flat.

The Chinese have Shanghai-ed America, and particularly New York City. In the past two decades, they built 10,000 skyscrapers over 20 stories in Shanghai, replete with neon lights and creative architecture. When the Chinese set out to build the world’s largest financial center, they simply do it. Shoppers pack nine-story malls and proudly walk the Bund marveling at this burgeoning bastion of financial prowess. NYC seems an aging and not-so-Big Apple by comparison.

This week is China’s “Fourth of July,” and the city is packed with people hanging out and carrying flags. All is orderly under the watchful eyes of ever-present police. The effect is different, though, from Beijing where everything has political undertones. Shanghai is all about capitalism. Everyone is buying or selling.

The U.S. has nothing like this scene any more. We are simply not building on this scale. The joke in Shanghai is that the city bird is the (construction) crane.

Barge traffic on the Yangzi River resembles rush hour on I-95. Coal and other mined materials predominate the parade, which includes intermodal containers and proceeds in as many as three lanes in each direction. Any slowdown is not readily apparent, although the sinking stock exchange signals something sinister. Flying out from the new international airport, one sees barges lined up far into the China Sea.

The mag-lev train to the airport amazes, covering 19 miles in 7 minutes and 15 seconds. Today’s peak speed of 267 mph was reached in exactly 3 minutes. The airport is huge, well soundproofed, clean and orderly.

If one wants to experience the ancient culture, you find it mainly in museums. Old sections of the city are systematically torn down and rebuilt or remodeled. The government owns 100% of the land, and occupants simply have a 70-year lease that from all appearances can be bought out by the government at will.

Traffic is controlled by charging thousands of dollars for a license plate that is only valid for a specific day of the week. Otherwise, people ride bikes or use mass transit.

Unlike Beijing, there is no need to learn Chinese in Shanghai. People are often bilingual, with English being the second language. Signs are sometimes only in English, but mostly in both languages. Is the government signaling a shift from Chinese?

There is a method to every madness here, and I don’t profess to have figured out everything. However, one wonders whether Shanghai isn’t an experiment in controlling 1.3 billion people including 59 minorities by ushering them through a new cultural revolution that looks eerily like America.

How does this economy really work? Apartments in Shanghai cost about $300,000, and buyers have to put 30% down for a mortgage. That doesn’t happen on a factory worker’s salary. In fact, the air in Shanghai seems much cleaner because they seemingly don’t have factories or coal burning power plants nearby.

Vacancy rates are as high as 70%, we were told. Wealthy people buy several units for speculation. Our downtown hotel had practically no other guests outside our tour group. Something just doesn’t add up.

Yet, the cranes are working daily.

Last week we boated through the beautiful environs of the Yangzi River gorges, and we noted that urbanization and industrialization are steadily erasing evidence of the Ming and the Qing Dynasties. In Shanghai, we found that these ancient cultures have been fully replaced by the economic miracle one might call the “Cha-Ching” Dynasty.

I am equally tempted to say, “Look out world,” as I am to say “Look out below!” Who is really being Shanghai-ed, the Americans or the Chinese people?